Global stocks, treasuries rise on Obama's victory
Stocks rose and Treasuries headed for the biggest advance in more than a week after President Barack Obama won re-election. US equity-index futures pared gains, while the dollar weakened and gold climbed for a third day.
The MSCI All-Country World Index increased 0.4 percent at 9:55 a.m. in London. Standard & Poor's 500 Index futures rose less than 0.2 percent, after adding as much as 0.4 percent and falling 1 percent. The 10-year Treasury yield declined five basis points to 1.70 percent, and the dollar retreated against 15 of its 16 major peers. Gold extended the longest winning streak in two months.
Obama defeated Republican Mitt Romney, boosting optimism policy makers will add to stimulus in the world's largest economy. He now faces negotiating with Congress to avoid the socalled fiscal cliff of more than $600 billion in mandated tax increases and spending cuts next year that threaten to slow U.S. growth. Greece's parliament votes today on austerity measures needed to keep a bailout on track.
"Obama's re-election is a short-term plus for markets because it clears up one area of uncertainty, but the general landscape has not changed," said Tatsushi Maeno, the head of investment at PineBridge Investments Japan Co., which manages about $11 billion globally. "With respect to the fiscal cliff, the chance of getting that resolved before year's end has diminished somewhat, compared with what it would have been if Romney had won." While Obama received at least 303 electoral votes to Romney's 206, Republicans kept a majority in the House of Representatives. Democrats retained control of the Senate. Federal Reserve Chairman Ben S. Bernanke's stimulus has helped keep the U.S. economy growing by purchasing $2.3 trillion of Treasuries and mortgage-related bonds and instituting a plan to buy $40 billion of home-loan securities a month. Romney had said he wouldn't reappoint Bernanke to a third term in 2014.
"With Obama's return, the excess liquidity in the global financial system should continue, which would boost demand for risky assets," Win Udomrachtavanich, chief executive officer at Bangkokbased One Asset Management Co. Ltd., which manages about $2.3 billion of assets, said by phone.
The Stoxx Europe 600 Index rose 0.5 percent to the highest level in more than two weeks. The gauge has climbed 13 percent this year, on course for the biggest gain since 2009. BNP Paribas SA (BNP) rallied 4.7 percent as France's largest bank said third-quarter profit more than doubled after it posted higher revenue at the investment-banking unit. Munich Re, the world's biggest reinsurer, advanced 3.2 percent after raising its fullyear forecast and reporting an almost fourfold increase in earnings. Randgold Resources Ltd. sank 5.5 percent after the producer of gold in West Africa said full-year output will be at the bottom of its target.
The cost of insuring against default on European corporate debt fell for a second day, with the Markit iTraxx Europe index of credit-default swaps linked to 125 investment-grade companies dropping 1.5 basis points to 124 basis points, the lowest in more than two weeks.
The increase in S&P 500 futures indicated the U.S. equities gauge will climb for a third day, extending this year's 14 percent advance. Since Obama took office on Jan. 20, 2009, the S&P 500 has risen 77 percent, while the MSCI All-Country World (MXWD) has gained 63 percent.
Twenty companies in the S&P 500 are due to release earnings today, including Time Warner Inc. and Kraft Foods Group Inc. Of index members to report third-quarter results, 70 percent have topped analyst estimates for earnings, while 60 percent missed sales projections, data compiled by Bloomberg show.