Global stocks rallied after Donald Trump said his administration would co-operate with president-elect Joe Biden’s transition team.
Europe’s benchmark Stoxx 600 gained 0.5 per cent in early trading, while London’s FTSE 100 and German’s Xetra Dax rose by 0.6 per cent.
In the Asia-Pacific region, Japan’s benchmark Topix rose as much as 2.3 per cent to its highest level in two years, after traders returned from a long weekend. Australia’s S&P/ASX 200 climbed 1.3 per cent and South Korea’s Kospi added 0.5 per cent.
The gains came after Mr Trump announced he had recommended the General Services Administration, which provides transition resources for incoming presidential administrations, to “do what needs to be done with regard to initial protocols”. He added this was “in the best interest of our country”.
The move, while short of a full concession 20 days after the November 3 election, marked the first break in an unprecedented effort by the White House to overturn the results. It could remove a lingering source of uncertainty for investors about the smooth transition of power to the president-elect’s administration.
“If they were unable to transition through the end of this year then the policy vacuum we would’ve entered into could’ve been all the more damaging to the US economy,” said Robert Rennie, global head of market strategy for Westpac.
Futures markets pointed to gains for US stocks when trading begins on Wall Street later in the day, with the S&P 500 tipped to climb 0.8 per cent.
Markets have also recently been unsettled by the US Treasury’s refusal to extend emergency lending facilities, stoking concerns the president was seeking to constrain the incoming administration’s ability to tackle the pandemic’s economic fallout.
It was also reported on Monday that Mr Biden is poised to choose Janet Yellen, the former head of the Federal Reserve, as his Treasury secretary. Analysts at Deutsche Bank said Ms Yellen would be “likely to try to closely align fiscal and monetary policy” and quickly reverse the Treasury’s move on the lending facilities.
Asian stocks were also boosted, investors said, by AstraZeneca and Oxford university’s announcement that the coronavirus vaccine they are jointly developing was up to 90 per cent effective, depending on dosage. That is “terrific news for all those emerging economies [in Asia] that have been so horribly hit”, said Mr Rennie at Westpac.
Brent crude, the international oil benchmark, rose 0.6 per cent to just above $46 a barrel on hopes that a vaccine might mean a gradual return to normality and rising demand.
Gold, which investors often turn to in times of uncertainty, fell 0.5 per cent to $1,827 per troy ounce. The dollar, another haven asset, slipped 0.3 per cent against to a basket of its peers.
In China, makers of personal protective equipment listed in Shanghai and Shenzhen fell following news of the AstraZeneca and Oxford university vaccine. China accounts for an estimated 44 per cent of global PPE shipments.
China’s CSI 300 benchmark of large onshore equities was down 0.6 per cent.