Joe Biden’s election (finally) as US president means the way markets ended last week will bear no resemblance to how they move today and in the coming weeks.
Stock exchanges in Australia and New Zealand will be the first to trade off the news of a new President, followed by Japan, China, Hong Kong (and then the rest of Asia, moving into Europe).
Seeing the ASX 200 futures rose 15 points or 0.2% on Friday night, our time – a small gain seems in prospect at the start of trading on the ASX this morning.
But given the news that Joe Biden is now President-elect (and subject to Trump’s temper), it wouldn’t surprise if the ASX (and the NZX) rise more than futures markets indicated.
Traders will be watching during the day for reaction from markets in Asia and early trading on US futures markets as well.
The ASX 200 rose 0.8% to end at 6,190 on Friday while the All Ordinaries Index were up the same amount to 6,395. A big gain today would not surprise.
Over last week the Australian market was up 4.4%, erasing last week’s 3.8% fall. The Aussie dollar remained well over 72.50 US cents at the close on Friday.
Biden was declared the winner, with counting to go in a couple of too close to call states. He has more than the 270 electoral college votes needed and more than 50% of the popular vote.
Donald Trump is sulking and refusing to go and threatens to launch a blitz of legal challenges from later today to counting and unproven claims of fraud and law-breaking.
But from early indications, Biden’s election has come as a relief to markets that were starting to fret about the length of time the vote counting was taking.
The three major Wall Street indexes notched their biggest weekly percentage gains since April (at the start of the post-COVID rebound) as the prospect of policy gridlock in Washington eased worries a Biden administration might tighten tax and other regulations on US companies.
The result in the Senate will be decided by two Senate seat elections in Georgia in January.
Looking at senior market-facing officials and current US Federal Reserve governor and former McKinsey consultant Lael Brainard has been floated as a potential Treasury Secretary.
Biden has already asked former Commodities and Futures market regulator and Goldman Sachs banker, Gary Gensler for advice on financial regulation. he looms as a possible head of the Securities and Exchange Commission and with his experience, would be a powerful regulator.
Biden says he will tackle the pandemic first and the economy and October’s jobs data underlined the problems facing the economy.
The recovery in US employment has slowed in the past three months as fiscal support waned and coronavirus cases surged to record levels in more and more states and nationally (close to 130,000 now).
Friday saw the Dow fall 66.78 points, or 0.24%, to 28,323.4, the S&P 500 lose 1.01 points, or 0.03%, to 3,509.44 but the Nasdaq added a mere 4.30 points, or 0.04%, to settle at 11,895.23.
For the week US shares rose 7.3%, Eurozone shares were up 7.5%, Japanese shares rose 5.9% and Chinese shares rose 4.1%. The election and its outcome (uncertain as it was) was clearly a big positive.
Eurozone shares fell 0.4% on Friday and the US S&P 500 was mostly flat.
After the October jobs report, US Republican Senate Majority Leader Mitch McConnell said economic statistics indicated Congress should enact a smaller coronavirus stimulus package that is highly targeted at the pandemic’s effects.
That left the Dow up 6.9% for the week, the S&P 500 up 7.3% and the Nasdaq was up 9%.
