Asian Stocks to Follow U.S. Gains; Dollar Rises: Markets Wrap

(Bloomberg) -- Asian stocks looked set to follow their U.S. peers higher Friday as investors focused on the prospect for more stimulus and the likelihood that calm will prevail as Joe Biden takes the presidency. The dollar strengthened.

Futures pointed to modest gains in Japan and Australia, though were little changed in Hong Kong. All major U.S. equity benchmarks notched all-time highs, with about 70% of the companies in the S&P 500 in the green and the Nasdaq 100 jumping 2.5%. The Dow Jones Transportation Average -- a proxy for economic activity -- also hit a record, while the Russell 2000 Index of small caps extended a three-day advance to almost 8%. Benchmark Treasury yields climbed toward 1.10%.

Elsewhere, Bitcoin pared gains after topping $40,000. Oil edged higher and gold dipped. The yen retreated with the euro.

A day after violence rocked the U.S. Capitol, investors are betting Democrat control of the Senate will pave the way for Biden to bring his legislative agenda to life and reshape the economy. While campaigning in Georgia before the runoff elections, he vowed that $2,000 stimulus checks would be sent out “immediately” if his party won the state.

“Markets (rightly, in our view) see the U.S. government as ultimately a stable-enough set of institutions even if things occasionally go pear-shaped,” Nick Colas, co-founder of DataTrek Research, wrote in a note to clients. “Politics play second fiddle to economic and corporate fundamentals when it comes to setting asset prices. The country’s economic future coming out of the pandemic remains promising.”

House Speaker Nancy Pelosi and Senate Democratic leader Chuck Schumer demanded that President Donald Trump’s cabinet immediately remove him from office and threatened a new drive to impeach him if they don’t act. The president is under siege from some Republicans as well as Democrats and from inside his own administration as top officials announce resignations.

Meanwhile, data Thursday showed that growth at U.S. service providers unexpectedly accelerated as gains in business activity and new orders helped offset a decline in a measure of employment. Friday’s jobs report is forecast to show a sharp slowdown in hiring. Federal Reserve Bank of Dallas President Robert Kaplan said officials shouldn’t intervene to slow rising bond yields because that’s expected to happen as the economy recovers.

On the virus front, more U.S. states reported their first cases of the variant that helped trigger a U.K. lockdown amid concern that Covid-19 deaths in the U.S. are likely to maintain a near-record pace at least through January. Mounting hospitalizations are offsetting any positive effect from the halting start to inoculations.

These are some of the main moves in markets:

Stocks

• The S&P 500 closed 1.5% higher.
• Nikkei 225 futures rose 0.5%.
• S&P/ASX futures climbed 0.3%.
• Hang Seng futures were flat.

Currencies

• The Bloomberg Dollar Spot Index jumped 0.6%.
• The euro declined 0.4% to $1.2274.
• The Japanese yen depreciated 0.8% to 103.82 per dollar.

Bonds

• The yield on 10-year Treasuries rose four basis points to 1.08%.

Commodities

• West Texas Intermediate crude rose 0.6% to $50.94 a barrel.
• Gold lost 0.2% to $1,915 an ounce.