· Political backdrop will help drive stocks to new highs, Federated’s Phil Orlando predicts
A major Wall Street firm just boosted its exposure to stocks.
According to Federated Hermes chief equity market strategist Phil Orlando, the firm increased its asset allocation to 3% from 2% hours after Election Day due to a more favorable environment.
“We’re pretty comfortable that the risk of a blue wave, if you will, was off the table,” he told CNBC’s “Trading Nation” on Friday. “So, we made a decision to add a percentage point to our overweight in equities.”
The firm funded the move by decreasing its overweight cash position, which is now back to neutral.
“We thought it was an appropriate time to throw another log on the fire,” said Orlando, who oversees almost $615 billion in assets under management.”[We] specifically added a tick into domestic large cap value which we think fundamentally will do better as the economy continues to gain steam.”
Orlando believes both the political and economic backdrop supports an *S&P 500 run to at least 3,800 over the next 12 months.* On Friday, the index closed at 3,509 — about 2% away from the all-time high.
· Dow futures rise nearly 400 points after Biden win as post-election rally continues
Stocks were set to continue their big post-election rally as futures rose in early morning trading Monday. The gains came as Democrat Joe Biden defeated incumbent Donald Trump in the U.S. presidential race to become president elect, according to NBC projections.
Futures on the Dow Jones Industrial Average rose 390 points, implying an opening gain of about 375 points on Monday. S&P 500 futures and Nasdaq 100 futures also both traded in positive territory.
· Risk assets cheer Biden win, dollar nurses losses
Shares surged, oil prices jumped and the U.S. dollar remained weak on Monday as expectations of fewer regulatory reforms and more monetary stimulus under U.S. President-elect Joe Biden supported risk appetite.
The Democratic candidate’s election victory was already largely priced in by markets, which had been trading with the view of a Biden presidency and a Republican-controlled U.S. Senate since last week.
MSCI’s broadest index of Asia Pacific shares outside of Japan jumped 1.4% to 614.73 points, the highest since January 2018. It climbed 6.2% last week to clock its best weekly performance since early June.
“While lots of attention was given to Trump vs Biden, markets have reacted strongly to the (likely) split congress, which means more confidence that interest rates will be lower for longer,” said Dave Wang, portfolio manager at Nuvest Capital in Singapore.
“The best opportunities now lie within segments of emerging markets, in particular China and North Asia. I believe earnings momentum and valuation put China in a very attractive risk/reward position.”
· Nikkei extends rally to new 29-year closing high after Biden win
Tokyo stocks extended their winning streak to a fifth session Monday, with the Nikkei ending at a fresh 29-year high, as investors seemed to believe that Democrat Joe Biden's victory in the race for the White House has removed some U.S. political uncertainty.
he 225-issue Nikkei Stock Average ended up 514.61 points, or 2.12 percent, from Friday at 24,839.84, its highest closing since Nov. 5, 1991. The broader Topix index of all First Section issues on the Tokyo Stock Exchange finished 23.41 points, or 1.41 percent, higher at 1,681.90.
Gainers were led by precision instrument, nonferrous metal and marine transportation issues.
· European markets climb in reaction to Biden’s presidential win
European stocks rallied on Monday as markets around the world make gains following Joe Biden’s U.S. presidential election win.
The pan-European Stoxx 600 climbed 1.5% in early trade, with travel and leisure stocks adding 2.9% to lead gains as all sectors and major bourses traded in positive territory.
European markets are tracking their global counterparts higher Monday as investors react to Democrat Joe Biden’s defeat of incumbent Donald Trump in the U.S. presidential race, according to NBC projections.
Reference: Reuters, CNBC
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