Risk sentiment took hold in Asian trading Monday, with Asian shares rallying and U.S. futures higher, while risk currency The Australian and New Zealand dollars led the way as investors welcomed news of Biden’s victory.
Australia’s ASX200 index closed up 1.75% at the close; Japan’s Nikkei 225 closed up 2.12%; South Korea’s KOSPI index closed up 1.27 per cent. The a-share rally was spectacular, with the gem rising more than 3% at one point.
In currency terms, the DOLLAR was little changed, trading around 92.20, with non-U.S. currencies mostly rebounding, led by the Australian and New Zealand dollars.
Commodities, spot gold maintained a rising trend, maintained in the day above $1950, is approaching the 1960 mark, silver high held steady.
On the news front, the Asian session was devoid of major data and events as markets continued to digest news about the US election, with Donald Trump so far refusing to concede despite Joe Biden becoming president-elect and a series of uncertainties ahead of the inauguration of a new President on January 20. Although still controversial, this may not worry investors too much unless the risks are likely to be recognised. For now, the focus is likely to be on Mr. Biden’s policies.
Markets will await Mr Biden’s stimulus package this week, but at this stage it is not certain that a deal can be struck during the lame-duck session.
Biden won the battleground state of Pennsylvania by 20 electoral votes, putting him over the 270 needed to win the general election, according to multiple media counts. However, Mr Trump refused to concede defeat, saying the election was “far from over”. His team has filed lawsuits in several key states, including Pennsylvania and Michigan, and says they plan to press for recounts in some close RACES.
In terms of congressional control, Democrats are on track to take the House of Representatives, while Republicans appear set to retain control of the Senate, but the final result will not come until a runoff vote in Georgia in January.
“From a market perspective, this is the ideal outcome,” said Michael McCarthy, chief strategist at CMC Markets in Sydney. No party controls Congress, so trade wars and tax increases are largely off the agenda.”
Leo Grohowski, chief investment officer at BNY Mellon Wealth Management in New York, believes U.S. President Donald Trump will not throw in the towel and will Sue to block the election result, so uncertainty over the outcome is likely to persist for some time and U.S. stocks could come under profit-taking pressure this week. He also argues that the Democrats’ failure to win control of the Senate is another reason for the markets to pull back.
Sam Stovall, chief investment strategist at CFRA in New York, agreed that with the U.S. election coming to an end and a Democratic presidency likely to be won, past experience suggests that the short-term downward pressure on U.S. stocks after a Democrat is elected President. He added that this year’s election was different from the 2000 election because the market had anticipated and pre-positioned changes, so the actual impact of election news on the market was limited.
In the current session, there are no major data releases, with the focus still on the POST-election situation in the US and renewed focus on the outbreak.
Coronavirus infections continue to surge in the United States. The United States has reported more than 126,000 new infections for two consecutive days. The number of people infected with the coronavirus worldwide passed the 50 million mark on Sunday, Reuters reported.
Trend analysis of major currencies:
Euro: The euro/DOLLAR firmed after a four-day rally and is now trading around $1.1890. From a technical point of view, the daily chart MACD red kinetic energy column is gradually expanding, the RSI indicator is holding steady above the 50 level, and the KDJ indicator is moving above the 50 level, indicating that there is still room for price to rise. Short-term initial support at 1.1850, initial resistance at 1.1900.
Sterling: The pound is trading around 1.3190 against the DOLLAR after trying to build on previous strong gains. From a technical perspective, the daily MACD red kinetic energy column is gradually expanding, the RSI indicator is hovering above the 50 level, and the KDJ indicator is approaching the overbought level upward, indicating that further price gains are expected. Short-term initial support at 1.3120, initial resistance at 1.3200.
Yen: After four days of heavy losses, the dollar tried to rally and was trading around 103.50 yen. On a technical level, the MACD green momentum column is gradually expanding on the daily chart, the RSI indicator is trying to rebound from oversold levels, and the KDJ indicator is hitting oversold levels downward, with prices expected to consolidate. Short-term initial support at 103.00, initial resistance at 103.80.