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US election effects: Markets rally after Biden victory showed | Trade Information

Global stock markets have rallied after Joe Biden’s US election victory.

Japan’s Nikkei was the most notable gainer, hitting a 29-year high after the confirmation of the result over the weekend.

In London, the FTSE 100 jumped 1.4% in early trading while indices in France and Spain saw similar increases.

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Mr Biden’s defeat of Donald Trump has eased fears about a continuation of a damaging trade war between the US and China, the world’s two biggest economies.

The Nikkei and China’s Shanghai Composite, were each up by about 2% while Hong Kong’s Hang Seng and South Korea’s Kospi each added just over 1%.

Markets had already enjoyed a strong run last week as it looked increasingly likely that Mr Biden was on course to amass enough electoral college votes to defeat Mr Trump.

Hopes that the new administration can enact a fresh round of economic stimulus have been dampened by the likelihood that congress will remain divided.

But on the other hand the absence of a “blue wave” sweeping Democrats to power in both the White House and the Senate means investors seem less likely to have to worry about higher taxes and tougher regulation for some big companies.

There is also the expectation that the US Federal Reserve, America’s central bank, will continue to provide much-needed monetary policy help to the coronavirus-battered economy.

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The economic arguments in the US election

The Fed has already cut interest rates and pumped trillions of dollars into the economy.

Richard Hunter, head of markets at interactive investor, said: “It is the first opportunity for markets to react to the Biden news from the weekend and the early signs are promising.

“Asian markets had a brisk and positive session on hopes of a less fractious relationship between the US and China in the immediate future.

“Despite the likelihood of the election result being contested, the fact that congress will be divided is now being priced in, which is seen as a tailwind for markets since sweeping changes are more difficult to introduce.”

Jeffrey Halley, senior market analyst for Asia Pacific at OANDA, said: “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 Republicans indicating an unwillingness to back large-scale fiscal stimulus, more monetary easing is on the way.”

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