LONDON / SINGAPORE (Reuters) – Bonds leaked and shares rose on Thursday as investors bet that Democratic control of the US Congress would allow President-elect Joe Biden to borrow and spend heavily, with a bruised dollar which hangs almost the lowest in almost three years.
The U.S. treasury expanded its strongest sales in months after the Democrats’ two-race victory in Georgia gave them close control of the Senate, which strengthened the election of President Joe Biden to pass his agenda.
The Euro STOXX 600 in Europe rose by 0.3%, with indices in Frankfurt and Paris by 0.4% and 0.6% respectively. Growth-linked sectors of energy to miners have risen on the prospect of more U.S. stimulus.
The MSCI World Equities Index, which tracks equities in nearly 50 countries, rose 0.3%.
Earlier, MSCI’s broadest Asia-Pacific equities index rose outside Japan by 0.6%, with Japan’s Nikkei highest since 1990.
Even after risk sentiment was earlier undermined by images of President Donald Trump’s supporters storming Capitol Hill to try to reverse his defeat in the election, S&P 500 futures contracts rose 0.6% as order was restored and Congress is back on track.
It quickly became clear that objections from pro-Trump Republican lawmakers to Biden’s victory in the battlefield would be overwhelmingly rejected, including by most Republicans.
“For equities, it will only be positive, and for other asset classes it will be different,” Olivier Marciot, a portfolio manager at Unigestion, said of the Democrats’ victory.
‘The securities movement yesterday was something we had not seen for a long time. The case is for reflection. ”
Wednesday’s sales of bonds boosted yields on the U.S. Treasury for ten years, rising as prices fall, by more than 1% for the first time since March. It rose to 1.0660% on Thursday. [US/]
Eurozone government bond yields also rose higher, with the ten-year Bund yield in Germany rising slightly to -0.55%. Japan’s government bond prices also declined, and this gained US leads.
USED DOLLARS
The effects of the Democrats’ victory also played out in the foreign exchange markets.
The dollar fell to Georgia’s lows to a low of almost three years against a basket of six major currencies, while traders would hamper the growing trade and budget deficits in the US. On Thursday, it rose 0.3% to 89,529.
Against the euro, it soared near a three-year low of $ 1.2349, and also slipped behind recent perennial troughs against the Aussie, Kiwi and Swiss francs.
However, some analysts have said that rising yields could help the dollar’s happiness.
“Higher yields from the treasury should favor the dollar against the euro and the yen,” said Masafumi Yamamoto, chief currency strategist at Mizuho Securities in Tokyo.
“However, the dollar will remain weaker against commodity currencies such as the Aussie currencies and emerging currencies.”
Other risk assets climbed.
Copper, a barometer of global growth, rose 0.3% to move near an 8-year high.
In Asia, miners Rio Tinto and BHP previously rose to the highest peaks, while chipmakers Samsung and SK Hynix drove South Korean shares to a record high.
The oil price held about a ten-month high and promised in the wake of a production cut by Saudi Arabia. Brent crude futures last rose 0.7% to $ 54.68 a barrel.
Gold was steady at $ 1,921 per ounce, and the bitcoin firm reached a new record high of $ 37,800. The cryptocurrency has grown more than a quarter this month after nearly quadrupling last year.
Reporting by Tom Wilson in London and Tom Westbrook in Singapore; Edited by Kirsten Donovan