The overnight rally follows a strong showing Monday on Wall Street, where investors are expecting the Democratic nominee for president Joe Biden to prevail over Republican incumbent President Donald Trump, and for Democrats to retake the Senate and maintain control of the House.
Although Republican policies typically favor stocks, investors are eager for more fiscal stimulus as the United States contends with the coronavirus pandemic. Investors predict a “blue wave” of Democrat victories would lift the chances of a comprehensive stimulus deal getting passed in the winter.
Premarket indicators showed Wall Street was heading for its second consecutive day of gains after stocks recorded their worst week since March. Dow (INDU)futures were last up 220 points, or 0.8%. S&P 500 (SPX) futures were up 0.6% and Nasdaq (COMP) futures were up 0.4%.
“The outcome [of the election] will most likely have a huge impact on the scale of the [US coronavirus stimulus package] scheme, and its timing,” wrote David Madden, market analyst at CMC Markets, in a research report on Tuesday. “It is possible that equity traders were keen to square up their books before voting took place.”
Asia is also likely getting a boost after the Reserve Bank of Australia cut interest rates to a record low of 0.1%. The move, which was widely expected, was intended to help the economy recover from the coronavirus pandemic.
Australia’s S&P/ASX 200 added 1.9%, while China’s Shanghai Composite (SHCOMP) advanced 1.4%. Japan markets were closed for a public holiday.
South Korea’s Kospi (KOSPI)gained 1.9%, the index’s best day since June. Hong Kong’s Hang Seng Index (HSI) jumped 2%, putting it on track for its best day in about three weeks.
The Hang Seng might also be picking up as investors prepare for the first day of trading in Ant Group, Jack Ma’s financial tech firm, later this week, noted Jeffrey Halley, senior market analyst for Asia Pacific at Oanda. The IPO, which is taking place in Shanghai and Hong Kong, is the biggest on record. Ant shares begin trading Thursday in Hong Kong.
— Anneken Tappe contributed to this report.