US midterms re­sult lifts global mar­kets

Irish Independent - Business Week - - FRONT PAGE -

WORLD stocks rose yes­ter­day, with Wall Street surg­ing af­ter the US midterm elec­tion di­vided con­trol of Congress, but the out­come, which casts doubt on fur­ther US tax cuts, hit the dol­lar and sent Trea­sury yields lower.

The Democrats looked to be headed for a gain of more than 30 seats in the House of Rep­re­sen­ta­tives, well be­yond the 23 they needed to claim their first ma­jor­ity in eight years. With Pres­i­dent Don­ald Trump’s Repub­li­can party hold­ing onto its Se­nate ma­jor­ity, the re­sults from Tues­day’s elec­tion were in line with ex­pec­ta­tions.

While grid­lock in Wash­ing­ton could ham­per Mr Trump’s po­lit­i­cal and eco­nomic agenda, few ex­pect a re­ver­sal of tax cuts and fi­nan­cial dereg­u­la­tion mea­sures that have al­ready been en­acted.

That view helped all three Wall Street eq­uity in­dices open stronger. The Dow Jones In­dus­trial Av­er­age rose 213.04 points, or 0.83pc, to 25,848.05, the S&P 500 gained 27.55 points, or 1pc, to 2,783 and the Nas­daq Com­pos­ite added 84.49 points, or 1.15pc, to 7,460.45.

“The good news in a way for mar­kets is that there was an un­cer­tainty that’s now been re­moved. We know where we stand for the next two years, and in­vestors will fo­cus back on the fun­da­men­tals, which are earn­ings growth and the econ­omy,” said Guy Miller, chief mar­ket strate­gist at Zurich In­sur­ance Group.

Still, a split Congress could ham­per Mr Trump’s push for a fur­ther round of tax cuts and dereg­u­la­tion that have tur­bocharged the US econ­omy, stock mar­kets and the dol­lar.

Af­ter volatile Asian trade, where stocks and the dol­lar swung on the Repub­li­cans’ fluc­tu­at­ing prospects, the pan-Eu­ro­pean STOXX

600 in­dex rose 1.02pc and MSCI’s gauge of stocks across the globe gained 0.90pc.

It was the sev­enth straight day of gains in global shares.

Riskier Eu­ro­pean bonds such as those from Italy also were in de­mand, with yields fall­ing 6-9 ba­sis points.

The US Fed is ex­pected to sig­nal this week that an in­ter­est rate rise re­mains on the agenda for De­cem­ber.

“It is now un­likely we will see ad­di­tional fis­cal stim­u­lus in the near-term, that’s a pro­found change but there will be no re­peal of what’s al­ready in place,” Mr Miller said.

Reuters

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