The FTSE 100 (UKX) rose 1.7% in early trade in London, with France's CAC 40 (CAC40) rallying 2.1% and Germany's DAX (DAX) up by a similar margin. Markets in Europe took their cue from Asia, where stocks posted their best gains in several weeks.
The rally follows a strong showing Monday on Wall Street, where investors are expecting the Biden to prevail over Republican incumbent President Donald Trump, and for Democrats to retake the Senate and keep control of the House of Representatives.
Although Republican policies typically favor stocks, investors are eager for more fiscal stimulus as the United States contends with the coronavirus pandemic. Investors predict a "blue wave" of Democrat victories would lift the chances of a comprehensive stimulus deal getting passed in the winter.
The willingness of investors to take on risk ahead of the election was surprising, particularly given the "buyers strike" towards the end of last week, said chief global markets strategist at Axi, Stephen Innes. "It tells me there is a lot of money sitting on the sidelines ... getting ready to ride the Blue Wave tsunami," he wrote in a research note.
Premarket indicators showed Wall Street was heading for its second consecutive day of gains after stocks recorded their worst week since March. Dow (INDU)futures were last up 358 points, or 1.3%. S&P 500 (SPX) futures were up 1% and Nasdaq (COMP) futures were up 0.9%.
"The outcome [of the election] will most likely have a huge impact on the scale of the [US coronavirus stimulus package] scheme, and its timing," wrote David Madden, market analyst at CMC Markets, in a research report. "It is possible that equity traders were keen to square up their books before voting took place."
Asia also got a boost after the Reserve Bank of Australia cut interest rates to a record low of 0.1%. The move, which was widely expected, was intended to help the economy recover from the pandemic.
Australia's S&P/ASX 200 added 1.9%, while China's Shanghai Composite (SHCOMP) advanced 1.4%. Japan markets were closed for a public holiday.
South Korea's Kospi (KOSPI)gained 1.9%, the index's best day since June. Hong Kong's Hang Seng Index (HSI) jumped 2%, putting it on track for its best day in about three weeks.
The Hang Seng might also be picking up as investors prepare for the first day of trading in Ant Group, Jack Ma's financial tech firm, later this week, noted Jeffrey Halley, senior market analyst for Asia Pacific at Oanda. The IPO, which is taking place in Shanghai and Hong Kong, is the biggest on record. Ant shares begin trading Thursday in Hong Kong.
— Anneken Tappe contributed to this report.
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November 03, 2020 at 05:17PM
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Global stocks and US futures climb as election day begins - CNN
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