SYDNEY- Asian shares climbed on Thursday and bonds extended their blistering rally as investors wagered the likely prospect of US policy gridlock would greatly favor some industries while putting a restraining hand on government borrowing.
The risk of a prolonged contested election remained, though the count was progressing in an orderly fashion with Democratic challenger Joe Biden narrowly ahead in key states.
MSCI’s broadest index of Asia-Pacific shares outside Japan climbed 1.3 percent to reach its highest since February, 2018. Japan’s Nikkei rose 1.1 percent to a nine-month top and South Korea put on 1.5 percent.
Chinese blue chips gained 0.8 percent, aided by talk a Biden White House might ease back on trade war tariffs.
E-Mini futures for the S&P 500 edged up 0.1 percent, after sharp gains overnight, while EUROSTOXX 50 futures eased 0.3 percent.
Both President Donald Trump and Biden have paths to 270 Electoral College votes as states tallied mail-in ballots. Biden remained optimistic on winning while the Republican incumbent filed lawsuits and demanded recounts.
Betting sites swung toward Biden as the results trickled in, having earlier heavily favored Trump.
Yet the prospects of the Democrats taking the Senate also dimmed, pointing to deadlock should Biden take the White House.
“A Biden win without full Senate support means less risk of regulation and higher corporate/ personal taxes,” wrote analysts at Nomura in a note.
“Asset market reaction over the past 24 hours confirms this view, with the US10-year yields declining sharply, and US tech/WFH/structural growth stocks outperforming on prospects of less economic aid.”
