Stock markets mostly gained yesterday as traders brushed off the storming of the Capitol building in Washington.
After gains across much of Asia, Europe followed suit, though London dipped on profit-taking after a huge gain on Wednesday.
The dollar rose across the board yesterday, while bitcoin continued its record run to strike an all-time high $37,802.
Oil prices steadied after recent strong gains.
“Traders are unfazed by the chaos that we experienced on Capitol Hill yesterday,” noted Naeem Aslam, chief market analyst at AvaTrade.
Congress formally certified Joe Biden as the next US president yesterday, dealing a hammer blow to Donald Trump whose supporters stormed the Capitol hours earlier, triggering unprecedented scenes of mayhem in the seat of American democracy.
It comes as Biden is set to push ahead with his legislative agenda that includes another huge stimulus package.
Analysts believe that while the new president could undo a lot of Trump’s tax cuts for the wealthy and corporations, he is unlikely to look at those until he has dealt with the virus and got the economy back up and running.
The violence in the US took attention away from soaring coronavirus cases around the world that are forcing governments to impose fresh lockdowns.
Traders are optimistic that the rollout of vaccines, though slower than hoped, will eventually allow life to get back to normal.
The Dow and S&P 500 both ended at new records on Wednesday, though the Nasdaq reversed earlier gains on worries about possible Democrat-led regulation of big tech firms.
Hong Kong was in the red yesterday after six days of gains, with market heavyweights Alibaba and Tencent diving following a report that the Trump administration is considering barring investment in their New York shares.
Tokyo’s Nikkei 225 closed 1.6% up at 27,490.13 points, Hong Kong’s Hang Seng closed 0.5% down at 27,548.52 points and Shanghai’s Composite ended 0.7% up at 3,576.20 points.
Elsewhere, electric carmaker Tesla closed trading on Wednesday with a market value topping $700bn for the first time.
The latest surge means the company is worth more than General Motors, Ford, Toyota, Honda, Fiat Chrysler and Volkswagen combined.
US Treasuries extended their steepest selloff in months after Democratic Party victories in two Georgia races handed them narrow control of the Senate, bolstering Biden’s power to pass his agenda.
Europe’s Euro STOXX 600 gained 0.2%, with indexes in Frankfurt and Paris up 0.4% and 0.6% respectively.
Growth-linked sectors from energy to miners rallied on the prospects of more US stimulus, though UK shares turned negative.
The MSCI world equity index, which tracks shares in almost 50 countries, rose 0.2%. S&P 500 futures rose 0.4%.
The shocking images of the assault on American democracy had earlier knocked sentiment, though markets focused on the implications of Democrat control of Congress.
Earlier, MSCI’s broadest index of Asia-Pacific shares outside Japan had risen 0.4% and Japan’s Nikkei hit its highest since 1990.
“The market is saying the reflation trade is on,” said Justin Onuekwusi, portfolio manager at Legal & General Investment Management.
“The Democrat sweep means there will be more flexibility and speed to writing a fiscal check so a one-off US fiscal boost as a bridge to a post-vaccine world is definitely on the cards.”
Wednesday’s bond sell-off pushed the yield on benchmark 10-year US Treasuries, which rises when prices fall, over 1% for the first time since March. It rose as high as 1.0660% yesterday before slipping back.
Eurozone government bonds followed suit, with Germany’s 10-year Bund yield up slightly to -0.55%.
Japanese government bonds also slipped.
“Higher Treasury yields should benefit the dollar against the euro and the yen,” said Masafumi Yamamoto, chief currency strategist at Mizuho Securities in Tokyo.
“However, the dollar will remain weaker against commodity currencies like the Aussie and emerging market currencies.”
Other risk-on assets climbed, with safe havens like the Japanese yen losing ground.
Copper, a barometer for global growth, gained 0.3% to hover near an 8-year high.
In Asia, miners Rio Tinto and BHP earlier surged to all-time peaks, while chipmakers Samsung and SK Hynix drove South Korean stocks to a record high.
Oil prices held around a 10-month high, basking in the afterglow of a production cut promised by Saudi Arabia.
Brent crude futures were flat at $54.25 a barrel.
Gold was steady at $1,921 an ounce, and bitcoin firm after hitting a fresh record high of $37,800.
The cryptocurrency has soared over a quarter already this month after almost quadrupling last year.
Workers remove a backdrop following a news conference at the Tokyo Stock Exchange. The Nikkei 225 closed 1.6% up at 27,490.13 points yesterday.
