Global stocks up as blue wave hopes lift US stimulus bets

"We do maintain a positive medium-term view for stocks into the middle of next year,” Mark Haefele, chief investment officer, UBS Global Wealth Management, wrote in a report.  "A stimulus deal will be struck eventually, central banks will continue to stay supportive, and medical developments still have scope to surprise.”

Earlier, MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.3 percent, inching closer to its Aug. 31 peak, which was its highest level since March 2018. China’s CSI300 index gained 2 percent after the Golden Week holidays. Japan’s Nikkei dipped 0.1 percent after reaching a 7-1/2-month high.

In a sign markets are pricing in a Biden victory, clean energy-related shares have outperformed in recent weeks. The iShares Global Clean Energy ETF has gained 14 percent so far this month, compared with 4 percent gains in the S&P 500 energy index.

”Biden seems to have a clear lead following the TV debate and a coronavirus cluster in the White House, which has raised questions about Trump’s crisis management capabilities,” said Mutsumi Kagawa, chief global strategist at Rakuten Securities.

A new Reuters/Ipsos poll found Americans are losing confidence in U.S. President Donald Trump’s handling of the coronavirus pandemic. His net approval on that issue has dropped to a record low.

The November contract of Volatility Index futures dropped to 30.25, its lowest level in three weeks, another sign of reduced worries about a contested election." The rise in U.S. yields, particularly at the long end, suggests increased expectations of a blue wave in the election,” said Koichi Fujishiro, an economist at Dai-ichi Life Research Institute.

The 10-year U.S. Treasuries yield has risen 11 basis points so far this week. It hit a four-month high of 0.797 percent on Wednesday but has since slipped, in part due to weak economic data. The 10-year German bond yield slipped 2 basis points to -0.536 percent while other core yields were 1-2 bps lower.

Data on Thursday showed the number of jobless claims in the United States came in 20,000 higher than economists expected at 840,000, showing unemployment in the world’s largest economy remains historically high and a recovery in the labour market is losing momentum.

Additionally, the World Health Organization reported a record one-day increase in global coronavirus cases on Thursday, led by a surge of infections in Europe.

In the currency market, the dollar eased 0.3 percent against a basket of currencies at 93.30, its lowest in nearly three weeks, and is down 0.8 percent on the week. It reached a two-month high of 94.75 in late September.

The Chinese yuan was the biggest beneficiary of the rising hopes of a Biden win, posting its biggest daily rise in more than four years after the holidays.

The yuan was last up 1.2 percent at 6.7112 per dollar in onshore trade and up half a percent to 6.7024 per dollar offshore.

The euro rose 0.1 percent to USD 1.1776, while sterling added 0.2% to $1.2961 but fell against the euro after worse-than-expected UK gross domestic product data.

Oil prices dipped, but both benchmarks remained on course for their biggest weekly gains since early June due to supply cuts caused by a storm in the Gulf of Mexico and a strike of offshore workers in Norway.

Brent was down 0.8 percent at USD 43.01 a barrel. U.S. West Texas Intermediate crude fell 0.9 percent to  USD 40.84.

A weaker dollar boosted gold, which gained 1.2 percent to USD 1,915.38 per ounce.