Asian shares scaled a near threeyear peak on Thursday and bonds extended their blistering rally as investors wagered the prospect of U.S. policy gridlock would greatly favour some industries while also restraining government borrowing.
The risk of a prolonged contested election did remain, though the count was progressing in an orderly fashion with Democratic challenger Joe Biden narrowly ahead in key states.
While the official outcome of the U.S. election remains unknown, the odds of a Biden win and Republicans maintaining control of the Senate are increasingly becoming the most likely outcome, said Randal Jenneke, a portfolio manager at T. Rowe Price.
This outcome is often seen as the goldilocks scenario for financial markets no radical policy changes and the Fed providing ample liquidity to try to support the economy and financial markets when required.
A divided government would constrain fiscal stimulus and any radical policy changes, which would boost growth stocks such as healthcare, IT and consumer discretionary, Jenneke added.
MSCIs broadest index of AsiaPacific shares outside Japan climbed 2 to reach its highest since February 2018. Japans Nikkei rose 1.7 to a more than ninemonth top and South Korea put on 2.4.
Chinese blue chips gained 1.3, aided by talk a Biden White House might ease back on trade war tariffs.
EMini futures for the SP 500 firmed 0.6 and NASDAQ futures 1.4. EUROSTOXX 50 futures added 0.3 and FTSE futures 0.25.
Both President Donald…