The financial markets reacted to the Biden win and the prospect of a Joe Biden presidency on Monday with high volatility which saw a sinking US Dollar, rising stocks, a leap in crypto and a jump in oil prices.
US Dollar Rebounds From Monthly Lows
It has been a volatile European trading session so far that saw the US Dollar initially sink to multiweek lows against a number of currencies before staging a dramatic rebound. The USD fell to a 28-month low against the Chinese Yuan, whilst also recording a 21-month low against the South Korean won. The Mexican peso increased by 0.7% to 20.3980 against the US dollar, the highest it has been since March.
As trading extended, the US Dollar rebounded strongly, backed by investors cashing in on heavy declines and reversing earlier losses. At the time of writing, the EUR/USD is up 0.02%, the GBP/USD down 0.20%, and the USD/JPY up 0.37%.
Against the commodity-backed currencies of the CAD and AUD, the USD saw steep declines as oil prices rose on a Biden win. The AUD/USD is up 0.19% and the USD/CAD is down 0.22%.
The US Dollar Index which measures the greenback against a basket of six weighted currencies hit a 10-week low, before rebounding to be up 0.12%.
Crude Oil Makes Gains
Increased global appetite for risk, spurred by the Biden win saw strong gains made in crude and Brent oil. Oil prices increased more than 2% on Monday with Brent oil passing $40 a barrel.
At the time of writing, crude oil is up 2.19% at $37.95 a barrel and Brent oil is up 2.36% to $40.38 a barrel.
Biden Win Sees Global Stocks Higher
Global stocks hit a record high on Monday with Asian stock investors showing their enthusiasm for a Biden win.
The Japanese Nikkei 225 closed 2.12% higher, the Topix index rose 1.41% to and South Korea’s Kospi increased 1.27%.
The Chinese Shanghai composite climbed 1.86% whilst Hong Kong’s Hang Seng index closed the day up 1.14%. The Australian S&P/ASX 200 closed 1.75% higher whilst the SCI’s broadest index of Asia-Pacific shares outside Japan increased 1.17%.
In a lively European trading session, Euro stocks rose. The French CAC is up 1.58%, the German DAX up 1.92%, whilst the UK’s FTSE 100 is up 1.44%.
Crypto Higher
Bitcoin (BTC) posted a 2% increase on Monday, meaning the granddaddy of cryptocurrency stays above the $15,000 barrier hit last week.
The general consensus appears to be that it’s better to have a President that has no comment about crypto rather than one that is openly against it.
Legendary Bitcoin investor Mike Novogratz was certainly happy, posting to Twitter to celebrate the win.
Markets Showing Risk on Biden Win
The market reaction to the Biden win shows an appetite for risk, despite possible spending and tax plans from the Democrats. ING’s James Knightley said in a research note:
Biden is “promising major spending increases, notably in healthcare, education and infrastructure projects. We also could be looking at major tax and regulatory changes. However, if Congress remains in Republican hands, we could see many of these policies watered down,”
A legal challenge by Trump is still ongoing and the result sill not ‘official’. However, the next few weeks look to be a volatile period ahead across all asset classes, no matter what happens.
