Stocks continue ascent despite White House race uncertainty

london — Stock markets rallied on Thursday and the dollar slid against the euro and pound as US election uncertainty reigned ahead of a key Federal Reserve update.

The knife-edge US presidential race has tilted toward Joe Biden, with Democrat wins in Michigan and Wisconsin bringing him close to a majority.

But President Donald Trump claimed that he was being cheated — and unprecedented complaint unsupported by any evidence — and has gone to court to try and stop vote counting.

“Likely Republican control of the Senate should put paid to increased corporate regulation and taxation while a new administration in the White House may well dial down tensions with other global superpowers on issues like trade,” noted AJ Bell investment director Russ Mould.

“This certainly seemed to be the thinking in Asia overnight as Japanese and Chinese equities staged substantial rallies.”

Europe picked up the baton by extending strong gains won Wednesday and Wall Street also built upon the previous days gains at the opening bell.

Hopes for a new economic rescue package out of Washington provided support to equities, even though any spending bill will not be as big as previously thought under a Democratrun Congress.

Dealers were also keeping tabs on coronavirus developments with England going into lockdown for a second time, joining France and other key European economies, though observers said they had largely been priced into markets now.

The Bank of England on Thursday unveiled an extra £150 billion ($195 billion) in cash stimulus as it forecast a deeper recession than previously thought for the coronavirus-wracked UK economy.

The EU on Thursday warned that Europe’s economy would not return to previrus normality before 2023.

The pound rose 0.7 per cent against

the dollar on Thursday, also amid uncertainty over the election outcome and a Federal Reserve rate decision, said Michael Hewson, chief market analyst at CMC Markets UK.

“Given the current electoral uncertainty it is quite likely that the Federal Reserve will reiterate its determination to support the US economy over the course of the next few months,” he noted.

The Fed is unlikely to offer much in the way of specifics on Thursday at the end of its two-day policy meeting, besides repeating its commitment to keep the benchmark borrowing rate at zero for the foreseeable future.

But Fed chair Jerome Powell could take the opportunity to signal a willingness to find new tools to help the economy, after the bank earlier this year pumped trillions of dollars of liquidity into the financial system and cut the US lending rate.

Oil steady, gold up

Oil prices were largely steady on Thursday as Biden edged closer to the White House, though doubts remain over further huge stimulus to bolster the economy in the face of the coronavirus crisis.

Brent crude fell 2¢ to $41.21 a barrel by 1446GMT and US West Texas Intermediate crude was down 13¢, or 0.3 per cent, at $39.02. Both contracts had jumped about four per cent on Wednesday.

And all the talk of policy easing put a floor under gold prices, leaving the metal up at $1,923 an ounce and the other main precious pairing of silver and palladium both up three per cent. —