Traders work on the floor of the New York Stock Exchange. — Reuters pic
LONDON, Nov 7 ― World stocks rose today, with Wall Street surging after the US midterm election a day earlier divided control of Congress, but the outcome, which casts doubt on further US tax cuts, hit the dollar and sent Treasury yields lower.
The Democrats looked headed for a gain of more than 30 seats in the House of Representatives, well beyond the 23 they needed to claim their first majority in eight years. With President Donald Trump’s Republican party holding on to its Senate majority, the results from Tuesday’s election were in line with expectations.
While gridlock in Washington could hamper Trump’s political and economic agenda, few expect a reversal of tax cuts and financial deregulation measures that have already been enacted.
That view helped all three Wall Street equity indices open stronger. The Dow Jones Industrial Average rose 213.04 points, or 0.83 per cent, to 25,848.05, the S&P 500 gained 27.55 points, or 1.00 per cent, to 2,783 and the Nasdaq Composite added 84.49 points, or 1.15 per cent, to 7,460.45.
“The good news in a way for markets is that there was an uncertainty that’s now been removed. We know where we stand for the next two years, and investors will focus back on the fundamentals, which are (company) earnings growth and the economy,” said Guy Miller, chief market strategist at Zurich Insurance Group.
Still, a split Congress could hamper Trump’s push for a further round of tax cuts and deregulation, measures that have turbocharged the US economy, stock markets and the dollar.
After volatile Asian trade, where stocks and the dollar swung on the Republicans’ fluctuating prospects, the pan-European STOXX 600 index rose 1.02 per cent and MSCI’s gauge of stocks across