Global stocks and US futures rallied on Monday as investors reacted positively to greater political certainty following Joe Biden’s victory in the US presidential election.
Dow (INDU)futures were last up 351 points, or about 1.2%. S&P 500 (SPX) futures were up around 1.4% and Nasdaq (COMP) futures were up 2.2%.
What Happens Next?
The move higher comes after stocks ended Friday mostly unchanged. The Dow slipped 67 points, or 0.2%. The S&P 500 and the Nasdaq were flat.
Wall Street was already expecting a Biden victory as the the election appeared to tip in the Democrat’s favor throughout last week. But investors are now able to react with more certainty: CNN projected Saturday that Biden would become President of the United States as his path to victory in Pennsylvania appeared to deliver him enough electoral votes.
While the race for control of the Senate still hangs in the balance — there are likely Senate runoff elections in Georgia still to come — investors are also expecting Republicans to hold the chamber. Such an outcome would likely mean more modest policies on taxes and regulations.
“It’s what happens in the Senate race that could determine the next move up or down,” said chief market analyst at CMC Markets, Michael Hewson. “If that looks as if it might change in the run-offs in January then you could see some weakness in certain parts of the stock market in the event the Democrats get their blue wave wish.”
The Boost To Tech Stocks
Expectations that Biden will usher in a more diplomatic approach to US foreign policy boosted global stocks. The FTSE 100 (UKX) in London was 1.6% higher on Monday, with France’s CAC 40 (CAC40) up by a similar margin and Germany’s DAX (DAX) gaining 1.9%.
Markets in Asia Pacific also rallied. South Korea’s Kospi Index (KOSPI) was up 1.3%, while Hong Kong’s Hang Seng Index (HSI) added 1.2% and China’s Shanghai Composite Index (SHCOMP) notched up 1.9%. Japan’s Nikkei (N225) — already trading at its highest level in nearly three decades — rose 2.1%.
A “fresh chapter to US foreign policy … is important to the world and of particular interest to the export-oriented economies namely China, Mexico, the [European Union] and Japan,” Margaret Yang, a strategist with DailyFX, wrote in a research note.
Biden’s COVID Control Plans
Looking ahead, investors will be watching the US president-elect’s next moves. On Saturday, Biden announced during his victory speech his plans to assemble a coronavirus taskforce that will aid in helping curb the spread of the virus. Biden is set to announce the names of those on his task force on Monday, two sources with knowledge told CNN.
The number of coronavirus cases has seen an upswing with more than 50 million cases of Covid-19 reported worldwide. A double-dip recession is looming in Europe, and there’s a risk that fourth-quarter US GDP will also turn negative.
Despite Biden’s victory, investors still have concerns for how Trump will respond to the election loss in the weeks ahead.”The one variable that cannot be accounted for is President Trump becoming even more erratic and destabilizing over the next 10 weeks,” said Brad Karp, chairman of Paul, Weiss, Rifkind, Wharton & Garrison LLP. “There is no telling what he might try to do and no ability to predict how the markets might react in response.”