Donald J. Trump via Twitter/via Reuters
- US stocks on Friday were set to reach record highs yet again as futures prices rose following President Donald Trump’s acknowledgment that Joe Biden would become president in less than two weeks.
- Democrats have pledged to launch more economic coronavirus relief, sending stocks across the board higher in a broad-based rally.
- The yields on longer-dated US Treasurys continued to rise as the market anticipated higher issuance and stronger growth and inflation.
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US stocks were set to continue their remarkable rally at the opening bell Friday, as indicated by futures prices, after President Donald Trump conceded defeat in the 2020 election and as investors positioned for more economic relief from President-elect Joe Biden and a Democratic-controlled Congress.
Traders continued to sell government bonds and move into stocks, pushing shares higher in Asia but gold lower. Chinese shares ended a six-day winning streak amid fresh tensions with the US, however.
Investors have piled into stocks in recent days with the vaccine rollout expanding and with Democrats taking control of the US Senate via two runoff victories in Georgia.
Even unprecedented scenes of pro-Trump rioters storming the US Capitol could not deter the rally, which has sent the S&P 500, the Dow Jones Industrial Average, the Nasdaq, and the Russell 2000 indexes to all-time highs.
S&P 500 futures were up 0.22% on Friday, while Dow futures were 0.23% higher and Nasdaq futures had gained 0.32%.
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“So much for a slow start to the new year,” said Han Tan, a market analyst at the trading platform FXTM.
“From a pair of tense Senate runoffs, to a mob breaching Capitol Hill and even a shock oil supply cut from Saudi Arabia, global investors have had plenty to take in this week. Yet, the buying momentum in stocks has continued unabated.”
The major factor driving stocks upward has been the Democratic sweep of the White House, the Senate and the House of Representatives. But Trump’s concession and promise of a “smooth, orderly, and seamless transition of power” in a video Thursday night have also calmed nerves.
Biden and his Democratic allies in Congress plan to launch a bigger round of economic coronavirus relief and also focus on infrastructure and low-carbon initiatives over the longer term. As part of the stimulus, the president-elect pledged during the Georgia runoff campaigns to get $2,000 direct payments to Americans “out the door immediately” should the two Democrats win their runoffs.
The rally in US stocks has been broad-based. Climate-friendly companies have profited. Tesla, for example, soared 7.94% on Thursday, making Elon Musk the world’s richest person. But industrials and other value stocks are up too.
The promise of more stimulus in the world’s biggest economy has also lifted markets around the world. Shares in Asia have rallied sharply, with Japan’s Nikkei 225 jumping a further 2.36% overnight and Hong Kong’s Hang Seng climbing 1.2%.
China’s CSI 300 slipped 0.33%, however, after a six-day rally. The Trump administration in its final days has attempted a new crackdown on Chinese companies, raising tensions.
Shares opened higher in Europe on Friday, with the continent-wide Stoxx 600 climbing 0.65%. The FTSE 100 rose 0.13%, putting it on track for a one-week rise of about 7%, its biggest one-week rally in two months.
US Treasury yields continued to rise as investors sold the safe-haven assets in favor of equities.
The yield on the 10-year Treasury note, which moves inversely to price, climbed 1.2 basis points to 1.083% as investors anticipated higher issuance from the government as well as growth and inflation. The 30-year yield rose 0.8 basis points to 1.853%.
Rising yields hit gold as investors turned toward assets with a yield. The spot gold price was down 1.2% to about $1,889 an ounce on Thursday morning. Gold has lost almost $100 since hitting two-month highs on Wednesday.
“Gold is very sensitive to the US 10-year yield,” said Jeffrey Halley, a senior market analyst at the currency firm Oanda. “If the 10-year yield keeps rising, gold could seriously threaten support. That could lead to a much deeper capitulation correction.”
But the startling rally in Bitcoin showed no signs of slowing, with the cryptocurrency powering past the $40,000 mark on Thursday. It then slipped back slightly and was last at about $38,487.
“The cryptocurrency achieved a major milestone and crossed the $40,000 level, which has made the $50,000 price as real as it can be,” said Naeem Aslam, the chief market analyst at AvaTrade.
“After recording another all-time high, we see profit-taking among many investors as they know that bitcoin is a kind of beast that can easily move 10% in a day in any direction.”
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