Democrat Senate Win Drives Stocks Higher, Bonds Lower

Bonds nursed losses while stocks and commodities gained on Thursday in anticipation of a big borrowing and big spending Democrat administration driving growth, following runoff elections that gave the party control of U.S. Congress.

U.S. Treasuries had suffered their steepest selloff in months after Democrat victories in two Georgia races handed them narrow control of the Senate, bolstering Presidentelect Joe Bidens power to pass his agenda.

Risk sentiment was temporarily dampened by images of President Donald Trumps supporters storming Capitol Hill, but SP 500 futures rose 0.6 and Nasdaq 100 futures rose 0.8 in the Asia session as order was restored. FTSE futures rose 0.4 and EuroSTOXX 50 futures rose 0.2.

Across Asia, big economically exposed stocks led gains. Chipmakers Samsung and SK Hynix drove South Koreas Kospi to a record high. Miners Rio Tinto and BHP surged to alltime peaks.

MSCIs broadest index of AsiaPacific shares outside Japan rose 0.7 and Japans Nikkei rose as much as 2 to hit its highest since 1990.

Its basically a reflation trade, said Mathan Somasundaram, head of Sydneybased research firm Deep Data Analytics, who added the Democrat sweep was unexpected by most investors and changes a lot.

Even though its a razorthin margin, it gives Democrats a twoyear window to pursue their agenda, he said. Anything that benefits from rising prices is going to do well…when you look at the policy settings they are trying to get through, its about printing money…

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