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Cyclicals Lead Global Stocks Higher; Dollar Drops: Markets Wrap

(Bloomberg) — Cyclical companies are powering global equities higher for a second day as investors cheered the start of U.S. President-elect Joe Biden’s formal transition and the prospect for more economic stimulus.

Futures on the S&P 500 and Russell 2000 outpaced contracts on the tech-heavy Nasdaq as investors doubled down on economically sensitive sectors such as travel and energy. Oil and gas shares led the Stoxx 600 Index higher. EasyJet Plc and International Consolidated Airlines Group SA rose after England planned to cut its quarantine period for arrivals from high-risk countries.

Haven assets were broadly weaker, while Bitcoin extended its searing rally, surpassing $19,000 for the first time since 2017.



chart, histogram: The digital currency climbs above $19,000 for the first time since December 2017


© Bloomberg
The digital currency climbs above $19,000 for the first time since December 2017

Stock markets globally trended higher after the General Services Administration acknowledged Biden as the apparent winner of the presidential election. The move reduces political uncertainty in the U.S., giving Biden and his team access to current agency officials, briefing books, some $6 million in funding and other resources.

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“Markets love certainty and the move by Trump overnight partially removes ambiguity over the presidential succession,” Jeffrey Halley, a senior market analyst with Oanda Asia Pacific Pte, wrote in a note. “A Biden administration is expected to be much less isolationist, with hopes that the U.S. will reengage on global trade and improve relations with China.”

A combination of good news on a Covid-19 vaccine and reports that former Federal Reserve Chair Janet Yellen could be named as the next Treasury Secretary are giving investors more confidence to pile on risk. That’s fueling the rotation out of defensive technology stocks and into assets that have been hardest hit by the pandemic, such as airlines and energy producers.

Wall Street is also viewing a possible Yellen appointment as reason to count on more economic stimulus. She recently said the recovery will be uneven and lackluster if Congress doesn’t spend more to fight unemployment and keep small businesses afloat.

In other markets, gold dropped to a four-month low and the dollar weakened against its major peers.

In New Zealand, the government proposed adding home prices to the central bank’s remit to rein in an overheating property market. The move has prompted investors to reduce bets on lower interest rates, pushing the kiwi to the highest level since June 2018.

In Germany, the operator of the DAX index announced the biggest overhaul since the index’s inception in 1988. The number of members will increase to 40 from 30 and new quality criteria will be imposed on both existing and prospective members.

Here are some key events coming up:

Minutes of the most recent Federal Open Market Committee meeting are due Wednesday.U.S. jobless claims, GDP and personal spending data come Wednesday.U.K. expected on Wednesday to deliver the government’s spending plans for next year.Thursday sees a policy decision and briefing from the Bank of Korea.U.S. celebrates the Thanksgiving holiday on Thursday.The week ends with Black Friday, the traditional start of the U.S. holiday shopping season.

These are the main moves in markets:

Stocks

Futures on the S&P 500 Index rose 0.7% as of 7:37 a.m. New York time.The Stoxx Europe 600 Index increased 0.5%.The MSCI Asia Pacific Index rose 0.9%.The MSCI Emerging Market Index decreased 0.1%.

Currencies

The Bloomberg Dollar Spot Index fell 0.2%.The euro increased 0.2% to $1.1866.The British pound was little changed at $1.3326.The onshore yuan was little changed at 6.587 per dollar.The Japanese yen was little changed at 104.56 per dollar.

Bonds

The yield on 10-year Treasuries rose one basis point to 0.86%.The yield on two-year Treasuries climbed less than one basis point to 0.16%.Germany’s 10-year yield gained one basis point to -0.58%.Britain’s 10-year yield increased less than one basis point to 0.319%.Japan’s 10-year yield climbed one basis point to 0.025%.

Commodities

West Texas Intermediate crude increased 1.3% to $43.60 a barrel.Brent crude climbed 1% to $46.53 a barrel.Gold weakened 1.5% to $1,811 an ounce.

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©2020 Bloomberg L.P.

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