Here’s How Stocks and Treasuries Are Reacting to Obama Win
Stocks and Treasuries have already begun to react following news late Tuesday that President Barack Obama had secured some key battleground States to win re-election. Meanwhile, the dollar rose against the euro and the British pound, but fell against the Japanese yen. Analysts said the dollar would benefit from safe-haven flows as worries about the looming U.S. fiscal cliff grow. U.S. equities declined.
The MSCI All-Country World Index increased 0.4 percent in early trading this morning in London. Standard & Poor’s 500 Index futures climbed early, but have declined nearly percent in regular trading. The 10-year Treasury yield fell over twelve basis points to 1.62 percent.
Obama’s re-election is being met with optimism that U.S. policymakers will continue with a stimulus that has helped keep the U.S. economy growing. Federal Reserve Chairman Ben Bernanke has overseen the Fed’s purchase of $2.3 trillion of Treasuries and mortgage-related bonds, and is instituting a plan to buy $40 billion of home-loan securities a month. Republican candidate for president Mitt Romney said during his campaign that he disagreed with the Fed’s measures to stimulate the economy and would replace Bernanke at the end of his term in January 2014.
The yield on 2-year Treasury notes fell four basis points to 0.26 percent, the lowest since October 16.
According to Bank of America Merrill Lynch indexes, Treasuries have returned 1.8 percent in 2012 and 15 percent since Obama’s inauguration in 2009.
Twenty companies on the S&P 500 are due to release earnings Wednesday, including Time Warner (NYSE:TWX) and Kraft Foods (NASDAQ:KRFT), which reported this morning. Of the S&P members that have already reported third-quarter results, 70 percent have topped analyst estimates.
Dow Jones Industrial Average futures also moved higher early Wednesday morning, but pulled back during regular trading. The Dow closed up 1.02 percent on Tuesday after all but two of its 30 companies moved higher. Intel (NASDAQ:INTC) was the only real loser yesterday, as news that Apple (NASDAQ:AAPL) may in the next few years abandon using Intel-built chips in its Mac computers weighed on shares. But the Dow is tumbling, down nearly 2 percent in afternoon trading.
The dollar fell to as low as 79.81 yen, well below its four-month high of 80.68 yen hit last week. The U.S. currency is down 2.1 percent so far in 2011, and 19 percent since Obama took office, according to Bloomberg Correlation-Weighted Indexes.
Comex gold prices hit a fresh two-week high on Wednesday morning.