Global share rally stalls but investors stay upbeat

NEW YORK • The global equity rally stalled yesterday, with European shares dropping and US futures unwinding some of this week's surge as America's presidential election count continued.

Asia's surge stuttered as profit-takers set in ahead of the weekend.

Tokyo, Sydney, Seoul, Wellington, Taipei, Jakarta, Mumbai and Manila all rose, but Hong Kong, Shanghai, Singapore and Bangkok slipped.

Still, Axi strategist Stephen Innes said the mood remained buoyant. "Equity markets' impressive ability to switch narratives and stay optimistic, almost regardless of the outcome, suggests continued high resilience," he said in a note.

Wall Street's main indexes were set to take a breather yesterday after surging more than 7 per cent this week.

The S&P 500 and the Dow Jones opened flat, as Democrat Joe Biden took the lead in the key swing states, putting him on the verge of winning the White House.

The Nasdaq dropped 0.18 per cent at the opening bell.

Treasuries were little changed after Federal Reserve officials kept interest rates near zero on Thursday, and made no change to asset purchases while stressing that the US economy needs more fiscal and monetary policy support.

Tech stocks led the decline in the Stoxx Europe 600 Index, with IT services firm Netcompany Group slumping more than 8 per cent after a downbeat earnings report.

"The market reaction to the unfolding election news suggests that financial markets would prefer to see a constrained Biden presidency," said Janus Henderson Investors' multi-asset head Paul O'Connor.

"The economic backdrop to this election is one of an incomplete global recovery that remains threatened by the continued spread of Covid-19 in many major economies as well as fast-fading fiscal support measures."

MSCI's all-country index of the world's 49 markets was flat after gains earlier in the week, close to the record reached in September.

Elsewhere, crude oil declined and gold was little changed. The US dollar held steady near a two-year low.

Investors also focused on the prospects of stalled talks on a US coronavirus relief package restarting. "We still anticipate that there will be a fiscal package in excess of US$1 trillion (S$1.35 trillion) next year," said Mr James Knightley, chief international economist at ING Group in New York.

"This stimulus, when combined with a long-anticipated Covid-19 vaccine, can really lift the economy and drive growth."

The election has done little to alter the broadly positive investment backdrop, noted Mr Didier Saint-Georges, managing director and a member of the strategic investment committee at asset manager Carmignac in Paris.

"Moving from Trump to Biden looks like a revolution, but in market terms, it may not be that significant."

BLOOMBERG, REUTERS, AGENCE FRANCE-PRESSE