Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Donald Trump often trumpeted stock market gains as proof that he was doing a good job. But today, the Biden Bounce is in full swing as investors welcome the result of the US presidential election.
European stock markets are heading for a strong open, up over 1%, amid hopes that US-EU relations will improve once Joe Biden enters the Oval Office in January.
The UK’s FTSE 100 on track to hit its highest level in over three weeks, following a rally in Asia-Pacific that has already swept Japan’s Nikkei to a 29-year peak.
IGSquawk
(@IGSquawk)Is this what they call a relief rally?
European Opening Calls:#FTSE 5985 +1.27%#DAX 12680 +1.60%#CAC 5039 +1.56%#AEX 581 +1.43%#MIB 19977 +1.50%#IBEX 6951 +1.18%#OMX 1843 +1.29%#STOXX 3252 +1.51%#IGOpeningCall
Biden’s victory offers the markets some certainty (which is always pleasing), while his pledge to unify America suggests a return to calmer days.
His pledge to fight the Covid-19 pandemic raging in America is hugely welcome – a new coronavirus task force is being convened today.
The Democrat is also likely to take a less belligerent line on foreign policy, giving business leaders more confidence to invest abroad. Trade negotiations could be less volatile too, although relations with China could still be tense.
Crucially, investors are also optimistic that negotiations on a desperately needed stimulus package can resume – to help struggling US families through the pandemic.
Jim Reid of Deutsche Bank told clients this morning:
Since Election Day, Senate Majority Leader McConnell has sounded more open to a stimulus deal. This shift in tone increases the chances for a lame duck package and could hint at the potential for a somewhat larger stimulus deal than they originally thought without a “Blue Wave”.
So they keep their current baseline assumption of a roughly $750bn fiscal package legislated by Q1 even though they previously worried about this in a split government scenario.
The next president is indeed likely to face a split Congress — unless the Democrats can win two Senate run-off elections in January to tie the upper house 50:50 (with a casting vote).
If the Republicans maintain their current majority, it will be harder for the White House to push through major tax and spending policy changes.
The prospect of gridlock is also pushing up equities, says Mark Haefele, chief investment officer at UBS Global Wealth Management.
Overall, we retain a pro-risk stance. We think the best course of action is to operate under the assumption that the US election is over and expect market focus to shift to medium-term drivers of economic growth.
These include COVID-19, vaccine developments, and monetary and fiscal stimulus.”
With Wall Street on track to rally, it could be a solid day for markets. We’ll be tracking all the action….
The agenda
- 10.35am GMT: Bank of England governor Andrew Bailey speaks at the Corporation of London Green Horizon Summit
- 2pm GMT: Bank of England chief economist Andy Haldane speaks on ‘The economic impact of coronavirus and long term implications for the UK’