Biden win boosts equity markets

Equity markets are on fire today following the US elections being called for Joe Biden. Mr Biden is perceived as being more friendly for trade, and with the Republican’s indicting an unwillingness to back large-scale fiscal stimulus, more monetary easing is on the way.

On the fundamental front, US Non-Farm Payrolls and the Unemployment Rate released on Friday both outperformed. Payrolls rose by 638,000 jobs, although the number hid a slide in Federal and State government’s hiring, with census workers laid off and state governments shrinking payrolls to balance budgets. Unemployment fell impressively to 6.90%, but again, the headline number may flatter to deceive. At the same time, these October employment numbers indicate a slight improvement in the labour market, as the US economy continues to take small steps on the road to economic recovery.

US index futures have leapt higher today; the Nasdaq is up 2.0% with the S&P 500 and Dow Jones futures both over 1.0% higher. Looking at the charts, I would hazard that new record highs are inevitable. The Economist magazine hasn’t said the same thing, so I am confident with that call.

Across Asia, the picture is much the same, a sea of green. The Nikkei 225 is 2.30% higher, and the Kospi is 1.25% higher. In China, the Shanghai Composite is 1.90% higher after impressive China export data, with the CSI 300 up 0.70%. Hong Kong has rallied 1.50% with Ant Financial well and truly forgotten.

Singapore has climbed 1.05%, led by banks, with Taiwan up 1.20%, Malaysia eking out a 0.10% gain as political concerns continue weighing, and Indonesia 1.50% higher. In Australia, the All Ordinaries and ASX 200 are 1.70% higher, with iron ore futures rallying this morning in China.

Europe is expected to follow suit, and I expect the Biden afterglow to withstand any tweets from the White House or threats of legal challenges. That should be the theme of the entire week.