Global stocks, trea­suries rise on Obama's vic­tory

The Pak Banker - - Front Page -

NEW YORK

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.

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