Picture: 123RF/LEUNG CHO PAN
Picture: 123RF/LEUNG CHO PAN

London/Tokyo — World shares pushed on from one-month highs, with Asian stocks closing in on two-and-a-half-year highs, as expectations grew of a Democratic victory in US elections in November, reviving hopes for more US stimulus.

A widening lead for Democratic US presidential candidate Joe Biden and the possibility his party will win both the Senate and the White House in the November 3 vote has raised the prospect of a big economic stimulus.

The possibility of stimulus is also helping to counter investor wariness about a Democrat pledge to hike corporate tax rates.

The pan-European Stoxx 600 index rose 0.3%, set for its second straight week of gains. Wall Street futures were up 0.4%.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.3%, inching closer to its August 31 peak, which was its highest level since March 2018. China’s CSI300 index gained 2% after the Golden Week holidays.

Japan’s Nikkei dipped 0.1% after reaching a seven-and-a-half-month high.

The MSCI world equity index, which tracks shares in 49 countries, was up 0.1% at a more than one month high.

On Wall Street on Thursday, the S&P 500 gained 0.80% and the Nasdaq Composite added 0.5%.

In a sign markets are pricing in a Biden victory, clean energy-related shares have outperformed in recent weeks. The iShares Global Clean Energy ETF has gained 14% so far in October, compared with 4% gains in the S&P 500 energy index.

"Biden seems to have a clear lead following the TV debate and a coronavirus cluster in the White House, which has raised questions about Trump's crisis management capabilities," said Mutsumi Kagawa, chief global strategist at Rakuten Securities.

A new Reuters/Ipsos poll found Americans are losing confidence in US President Donald Trump’s handling of the coronavirus pandemic. His net approval on the issue that has dropped to a record low.

The November contract of Volatility Index futures dropped to 30.25, its lowest level in three weeks, another sign of reduced worries about a contested election.

"The rise in US yields, particularly at the long end, suggests increased expectations of a blue wave in the election," said Koichi Fujishiro, economist at Dai-ichi Life Research Institute.

The 10-year US treasuries yield has risen 8.5 basis points so far this week, to 0.779%. It hit a four-month high of 0.797% on Wednesday, but has slipped in part due to weak economic data.

The 10-year German bond yield was unchanged at -0.525% . Other core yields were a touch lower, .

Data on Thursday showed the number of jobless claims in the US came in 20,000 higher than economists expected at 840,000, showing unemployment in the world's largest economy remains historically high and a recovery in the labour market is losing momentum.

Additionally, the World Health Organisation reported a record one-day increase in global coronavirus cases on Thursday, led by a surge of infections in Europe.

In the currency market, the dollar weakened against most other currencies, easing 0.1% against a basket of currencies at 93.47 and down 0.4% for the week, the second week of declines in a row. It reached a two-month high at 94.75 in late September.

The yuan was the biggest beneficiary of the rising hopes of a Biden win, posting its biggest daily rise in more than four years after the holidays. The yuan was last up 1.2% at 6.7112/$ in onshore trade and up 0.5% to 6.7024/$ offshore.

The euro rose 0.1% to $1.1776, while sterling added 0.2% to $1.2961 but fell against the euro after worse-than-expected UK GDP data.

Oil prices edged up, propelled by supply outages caused by a storm in the Gulf of Mexico and a strike of offshore workers in Norway. Both benchmark contracts were on course for their biggest weekly gains since early June.

Brent was up 16c at $43.50 a barrel. US West Texas Intermediate crude rose 14c to $41.33.

A weaker dollar boosted gold, which gained 1.1% to $1,914.28/oz.

Reuters

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