After Joe Biden's win in the U.S. presidential election, financial markets worldwide have rallied, and now the global shares have reached a record high.
Stocks surge
The MSCI world equity index, which tracks shares in 49 different countries, increased 0.5% at a record high in early European trading, according to MSN.
The Japanese stock market hit its highest level in almost 30 years. The stock prices in Europe increased on November 9 after the president-elect promised to bring unity to the country after four years under the Trump administration.
Britain's stock market increased to its highest level in almost four weeks, rising back above the 6,000 marks. The FTSE 100 index was up 94 points to 6,004 in early trading, recording a 1.6% gain. The Europe-wide Stoxx 600 index increased by 1.4% to the highest level since October 14, with gains in all of the main markets in Europe.
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Germany's Dax increased by 1.9%, and France's Cac increased by 1.8%. The Nikkei index in Tokyo increased by 2.12% to 24,839, a new high in 29 years. In China, the Shanghai Composite was up by 1.9%, Hong Kong shares rose by 1.2%, and the ASX200 in Sydney increased by 1.75%.
Connor Campbell, a financial analyst at Spreadex, said that the markets came out of the weekend as they were ready to celebrate after Joe Biden was announced as the next U.S. president, according to CNBC.
Campbell added that the real test for the markets is going to be the coming days and weeks. This is because current President Donald Trump is showing no signs of conceding, and it is enough for the Republican party to back him up on voter fraud claims and his persistence in filing lawsuits.
According to Campbell, the seriousness with which such challenges are pursued and their perceived chances of success is slim. However, a rightwing supreme court can't be discounted, and they can still undermine the market's recent gains.
Futures trading also suggests the Dow Jones will increase by 1.26% when Wall Street opens, while the S&P500 is expected to increase 1.5%, and the tech-heavy Nasdaq will increase more than 2%.
Biden's control of the Senate
Investors are betting that Joe Biden will most likely find himself without control over the Senate. Therefore, it is unable to push through any fiscal stimulus, obliging the U.S. Federal Reserve to continue pumping money into the economy and keeping borrowing costs at their historically low levels.
Dave Wang, a portfolio manager at Nuveen Capital in Singapore, said that while a lot of attention was given to the Trump vs. Biden fiasco, stock markets have reacted strongly to the likely split in Congress means that more confidence that interest rates will be lower for longer.
Damien Klassen from Nucleus Wealth in Australia said that the market's reaction had still been strange given the prospect that Joe Biden would be hamstrung by the Senate Republicans, according to The Guardian.
Despite a rush of money into the stock markets because of demand, Klassen believed the global economy's outlook was troubling because it relied on government stimulus.
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