U.S. stock futures and international markets traded higher, in some of the final hours of trading before Election Day begins in earnest.
By early afternoon Tuesday in Hong Kong, E-mini S&P 500 futures had risen 0.5%. In the previous session, the Dow Jones Industrial Average had jumped 1.6%, rebounding after its worst week since March, while the S&P 500 and Nasdaq Composite had also risen.
Stock indexes in the Asia-Pacific region tracked Monday’s U.S. gains. Hong Kong’s Hang Seng Index and Australia’s S&P/ASX 200 rose by 2% or more, while China’s Shanghai Composite and South Korea’s Kospi Composite each gained more than 1%.
Paul Sandhu, head of multiasset quant solutions for Asia-Pacific at BNP Paribas Asset Management, said market optimism was fueled partly by investors betting on a victory by Democratic challenger Joe Biden, which could make it more likely U.S. lawmakers will approve a more generous stimulus package to spur economic activity.
“The market sees a Biden win as the surest way to help mitigate Covid-19 and to get a positive outcome on stimulus talks,” Mr. Sandhu said. “If any party holds the power of both the Senate, House and the presidency, that’s the surest win for a stimulus deal, and that scenario is easier to do with a Democratic leadership because they already have the House.”
Mr. Sandhu said some investors were taking the opportunity to diversify their portfolios into Asian shares, betting markets could be volatile in the short term ahead of a final election result.
President Trump and Mr. Biden made their final pitches to voters on Monday.
Government bonds were steady, with yields on the 10-year U.S. Treasury little changed at 0.852%.
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