Thursday , November 26 2020

Global stock markets are rising after the democratic triumph in the room, while bonds and the dollar are falling




Global shares rose on Wednesday after a major Democratic victory in the US parliamentary elections, but the result could exclude more tax cuts, which caused the dollar to fall and yields on government bonds.

The Democrats exploited a wave of dissatisfaction with the administration of President Donald Trump, winning more than the 23 seats they needed to gain control of the House of Representatives, its first majority in eight years.

With the Republicans controlling the Senate, Tuesday's results were in line with the polls.

In addition, while the blockages to be held in Congress could affect the political and economic service of Republican President Donald Trump, few expect to reverse the tax and fiscal deregulation measures already in place.

This view helped the three major stock indices in New York to grow 0.7% on Tuesday and opened up Wall Street. The S & P500 and Nasdaq contracts were added 0.7% and 1.25% respectively.

"In a way, the good news for the markets is that uncertainty is over," said Guy Miller, a strategist at the Zurich Insurance Group. "We now know why we are for the next two years and investors will focus on the fundamental principles of increasing corporate profits and the economy."

Later on Wednesday, the Open Market Committee of the United States Federal Reserve is launching in Washington. The Fed is expected to signal that it retains plans to raise interest rates in December.

This expectation helped push the dollar by 0.4% against its peers. Against the yen, the currency lost 0.4%, while the euro gained 0.5% against foreign exchange.

On bond markets, American US government bond yields declined by 3.18%, marking a loss of 4 percentage points in the session. The decrease is due to the inability to adopt more budgetary stimuli.

Attention will also be paid to Trump's aggressive attitude towards international trade, particularly on tariffs that can be imposed without the approval of Congress. This remains a concern for a trade war between Beijing and Washington.

Japan's Nikkei shares were on average 0.3% lower as investors rated the impact of the elections in the United States.

In China, the average CSI300 of listed documents in Shanghai and Shenzhen lost 0.7%, as weak corporate profits and an uncertain economic outlook countered the government promising to support markets.


Source link