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Thursday 05 November 2020
The rally on Wall Street continues. Investors are betting that there will be no radical political change of direction in the United States after the presidential election. The US Federal Reserve is sticking to its extremely expansionary monetary policy. Meanwhile, a chip maker’s stock is skyrocketing.
Hoping for a continuation of the economic status quo in the US, more investors are stocking up on shares. “Markets prefer a divided government,” said investment strategist Brian Levitt of wealth manager Invesco. This eases concerns about tax hikes, large investments in renewable energy or changes to health insurance. As a result, the US standard values index rose Dow Jones this Thursday by 2.0 percent to 28,390 points. The technological one Nasdaq advanced 2.6 percent to 11,890 points and that broad S&P 500 it gained 1.9 percent to 3510 points.
Joe Biden, the challenger of US President Donald Trump, there are only a few votes left in the electorate for entry to the White House. However, its Democrats failed to achieve their goal of winning a majority in the Senate and House of Representatives. This means that stricter regulation of the economy is out of the question, said portfolio manager Justin Onuekwusi of asset manager Legal & General. “This is a huge benefit and outweighs the likelihood of a smaller stimulus package.” Decreasing fear of cartel investigations has helped big tech companies like Amazon or Apple earn up to 3.6%.
Fed like a savior in times of need
In the midst of the suspended game on the outcome of the elections, the central bank got ready powered the ground for the new Economic aid. It left the key interest rate between zero and 0.25 percent and at the same time held the door open for new emergency aid in the crown pandemic. Fed Chairman Jerome Powell said monetary supervisors extensively analyzed and discussed their multi-billion dollar bond program at the meeting. They are determined, if necessary, with “powerful tools” like these to support the economy, hard hit by the crisis. The duration, scope and composition of the purchasing program can be changed if necessary.
This prospect has hit the world reserve currency again. The Dollar index, which reflects the exchange rate against major currencies, fell 0.9 percent. At the same time, the investors coincided Gold one that rose 2.4 percent to $ 1,948 per troy ounce (31.1 grams). The precious metal often acts as a hedge against inflation.
Stockbrokers don’t rule out riots
However, some stockbrokers have warned against relying on a smooth transfer of power in view of the tight US election result. Trump would cling to power stubbornly, predicted Naeem Aslam, chief market analyst at brokerage firm AvaTrade. “We are on the brink of civil war and it is only a matter of time before Trump opens the doors.” Both Trump and Biden supporters took to the streets in several cities across the United States, some with guns. At the same time, Trump has enabled his lawyers to stop the ongoing count in some states or to enforce a recount.
Qualcomm at all-time highs – GM in the fast lane
On the US stock market, newspapers increased Qualcomm a full twelve percent after the chip maker promised sales that exceeded market expectations for the current quarter. The company is one of the beneficiaries of the move to the new 5G mobile communication standard, which requires the use of new cell phones, analysts from wealth manager Canaccord Genuity wrote.
The titles of General Motors (GM), which were 5.4% more expensive. Thanks to rapid sales of profitable pickups and SUVs, the automaker made a surprisingly high quarterly profit. The profit margin of 15 percent is impressive, praised investment bank Jefferies analyst Philippe Houchois.
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