RTRS: World stocks higher after Obama win ends uncertainty
By Rafael Nam
HONG KONG (Reuters) - Asian shares hit a three-week high and the dollar extended gains after Barack Obama became the next U.S. president, ending uncertainty about who will lead the world's largest economy in the midst of great financial peril.
U.S. Treasuries fell as investors became bolder in taking risk, though U.S. stock futures remained little changed and oil succumbed to profit-taking after signs of global production cuts had sent crude prices up 10 percent on Tuesday.
The new Obama administration, which takes office in January, will face the world's worst financial crisis since the Great Depression, and a potentially steep slowdown in the global economy that has pounded markets from Tokyo to Frankfurt to New York.
Unprecedented measures to rescue banks across the world, aggressive rate cuts by central banks, and the improvements in credit markets have in the last week given global markets a respite from a thrashing, but some still urged caution.
"The knee-jerk complacency rally in Asia to an Obama win is likely creating an opportunity to sell," said Kirby Daley, a senior strategist for Newedge Group in Hong Kong.
"The bottom line is economic fundamentals in the U.S. are deteriorating faster than the market can keep up with. And there is very little an Obama administration can do to shield Asia from the effects of this downturn."
The MSCI index of Asian stocks outside Japan .MIAPJ0000PUS rose for a seventh consecutive session on Wednesday, with its 3.2 percent gain as of 0450 GMT placing the index at the highest since October 16.
The gains came after U.S. stocks on Tuesday enjoyed their biggest election day rally ever.
Tokyo's Nikkei .N225 rose 2.6 percent, led by exporters such as Honda Motor Co (7267.T: Quote, Profile, Research, Stock Buzz) that were bolstered by a softer yen, while energy-linked firms such as Mitsubishi Corp (8058.T: Quote, Profile, Research, Stock Buzz) gained on the oil price rally.
Markets in Shanghai .SSEC, Hong Kong .HSI and Singapore .FTSTI rose more han 4 percent each, while stocks in Australia gained more than 2 percent. South Korea .KS11, India .BSESN and Taiwan .TWII saw more muted gains.
DOLLAR ADVANCES
In a measure that investors may be more willing to add risk, U.S. Treasury prices fell after Obama's win. The 2-year note's price traded down 3/32 for a yield of 1.44 percent.
The dollar advanced following Obama's election, recovering some of the prior days losses that saw the currency suffer its biggest one-day slide in 13 years when investors went searching for higher yielding currencies.
"(Obama's win) is arguably likely to prove more positive for foreign markets given the perception that he will be stronger in terms of dealing with US economic problems, is seen more favorably by foreigners generally, and is less likely to follow the policies of President Bush," Calyon said in a report.
The dollar rose 0.7 percent against a basket of major currencies to 85.187 .DXY. The euro hit the day's low of $1.2830 after the projection of a win for Obama, and was down 0.9 percent from late U.S. trade at $1.2868 at 0423 GMT.
The dollar dipped 0.1 percent to 99.66 yen.
Oil remained lower after the U.S. presidential election, with crude down $1.50 to $69.05 a barrel as investors took profits after a spike the previous session following signs that Saudia Arabia and other OPEC members had made promised cuts in crude production.
