- Since President Donald Trump has admitted that Joe Biden will be president in less than two weeks, futures prices will rise and the US stock market will hit a record high on Friday.
- The Democrats promised to introduce more economic relief measures for the coronavirus, which will push stocks to rise across the board in a broad rebound.
- As the market expects an increase in issuance, growth and inflation, yields on US long-term bonds continue to rise.
- Visit Business Insider̵
U.S. stocks set to continue to rebound significantly at the opening on Friday, as instructed by futures prices, after President Donald Trump’s election in 2020, as positioned for more economic relief from President-elect Biden, investors confessed their defeat and Democratic control. Congress.
Traders continued to sell government bonds and buy shares, pushing Asian stocks up, but gold fell. However, in the new tense relationship with the United States, the Chinese stock market ended its six consecutive days of upward movement.
In recent days, as the promotion of vaccines has expanded and the Democratic Party has controlled the U.S. Senate through two runoffs from Georgia, investors have entered the market.
Even the unprecedented scene of pro-Trump mobs sweeping the U.S. Capitol could not stop the rally, which made the S&P 500, Dow Jones Industrial Average, Nasdaq and Russell 2000 all record highs.
S&P 500 futures rose 0.22% on Friday, the Dow Jones index rose 0.23%, and Nasdaq futures rose 0.32%.
read more: Critics say Trump’s Facebook ban is just a “Band-Aid”
Han Tan, a market analyst at the trading platform FXTM, said: “This is very important for the slow start of the new year.”
“From two tense runoffs in the Senate, to the mob that destroyed the Capitol, and even Saudi Arabia’s oil production cuts, global investors have had a lot of demand this week. However, the momentum for stock purchases has not weakened.”
The main factor driving the stock rise is the sweep of Democrats in the White House, Senate and House of Representatives. But Trump’s concessions and promises of “smooth, orderly, and seamless transition of power” made on Thursday night’s video also made people feel at ease.
Biden and his Democratic allies in Congress plan to launch a broader economic coronavirus rescue. In the long run, they will also focus on infrastructure and low-carbon programs. As part of the stimulus, the president-elect in the Georgia Runoff Campaign promised to get a direct payment of $2,000 to Americans “getting out of the house immediately” should the two Democrats win their runoff.
The rise in the US stock market is widespread. Climate-friendly companies have already profited. For example, Tesla soared 7.94% on Thursday, making Elon Musk the richest man in the world. But industrial and other value stocks also rose.
The promise of more stimulus measures to the world’s largest economy also boosted global markets. Asian stock markets rose sharply, Japan’s Nikkei 225 index rose further by 2.36% overnight, and Hong Kong’s Hang Seng Index rose 1.2%.
However, after six days of rising, China’s CSI 300 Index fell by 0.33%. The Trump administration’s attempt to repress Chinese companies in the last few days has increased tensions.
European stock markets opened higher on Friday, and the Stoxx 600 across the European continent rose 0.65%. The FTSE 100 Index rose 0.13% and is expected to rise by about 7% within a week, which is the largest weekly gain in two months.
U.S. Treasury yields continue to rise as investors sold safe-haven assets and switched to buying stocks.
The yield on the 10-year US Treasury note, which is inversely proportional to the price, climbed 1.2 basis points to 1.083%, because investors expect government-issued bonds to increase, and growth and inflation rates will also rise. The 30-year Treasury bond yield rose 0.8 basis points to 1.853%.
read more: The Democratic victory in Georgia will pave the way for federal cannabis reforms and stimulate major investors to jump into this booming industry
As investors turned to yielding assets, rising yields hit gold. On Thursday morning, spot gold prices fell 1.2% to about $1,889 per ounce. Since hitting a two-month high on Wednesday, gold has fallen nearly $100.
Jeffrey Halley, a senior market analyst at currency company Oanda, said: “Gold is very sensitive to 10-year US Treasury bonds. “If yields on 10-year Treasury bonds continue to rise, then gold may seriously threaten support. This may lead to a deeper correction of surrender. “
But Bitcoin’s astonishing rebound showed no signs of slowing down, and the cryptocurrency broke the $40,000 mark on Thursday. Then it fell back slightly and finally closed at $38,487.
Naeem Aslam, chief market analyst at AvaTrade, said: “The cryptocurrency has reached an important milestone and broke the $40,000 level, which makes the $50,000 price a reality.”
“After hitting a record high, we have seen profit-taking by many investors because they know that Bitcoin is a beast that can easily move 10% in any direction within a day.”