Stock Markets Soared on Tuesday. How much did the S&P 500 Gain?
Cyclical companies gained recently, pushing global equities higher for a second day. Investors were hopeful as elected U.S. President Joe Biden began a formal transition. The prospect for more economic stimulus also boosted optimistic sentiment.
Futures on the Russell 2000 and S&P 500 surpassed contracts on the Nasdaq composite as investors moved on economically sensitive sectors such as energy and travel. Oil and gas shares soared, leading the Stoxx 600 Index higher. International Consolidated Airlines Group SA and EasyJet Plc surged forward after England decided to cut its quarantine period for arrivals from high-risk countries.
On Tuesday, futures on the S&P 500 Index jumped by 0.7%, while the Stoxx Europe 600 Index climbed up by 0.5%. The MSCI Asia Pacific Index also rallied by 0.9%. On the other hand, the MSCI Emerging Market Index lowered by 0.1%.
Save-haven assets weakened broadly, and Bitcoin continued rallying. The digital coin surpassed $19,000 for the first time since 2017.
What caused stock markets’ bullish trend?
Stock markets moved in the green after the General Services Administration acknowledged Joe Biden as the winner of the U.S. presidential election. That move reduced political uncertainty in the States. While also giving Biden and his team access to current agency officials, approximately $6 million in funding, briefing books, and other resources.
Jeffrey Halley, the senior market analyst with Oanda Asia Pacific Pte, stated that stock markets love certainty. Thus, Trump’s move overnight removes some ambiguity over the presidential succession. Investors expect Biden administration to be much less isolationist while hoping that the U.S. will improve relations with China and reengage on global trade.
According to reports, former Federal Reserve Chair Janet Yellen may be named as the next Treasury Secretary. Additionally, Covid-19 vaccine testing is successful thus far. As a result, traders are more confident and willing to take risks. Thus, fueling the rotation into assets that have been hardest hit by the pandemic, such as energy producers and airlines.
Besides, Wall Street thinks a possibility of Yellen’s appointment may be a reason to count on more economic stimulus. She recently stated that the recovery would be uneven and lackluster. Particularly, if Congress doesn’t spend more to curb unemployment, as well as keep small businesses afloat.
Meanwhile, gold tumbled down to a four-month low, and the greenback declined against its major peers. New Zealand’s government suggested adding home prices to the central bank’s remit, trying to rein in an overheating property market. However, that move has prompted traders to reduce bets on lower interest rates, propelling the kiwi to its highest level since June 2018.
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