Stocks higher as Joe Biden takes office and Democrats take Senate

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·Finance and policy reporter
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US president Joe Biden delivers his inaugural address on the West Front of the Capitol. Photo: Tasos Katopodis/Getty
US president Joe Biden delivers his inaugural address on the West Front of the Capitol. Photo: Tasos Katopodis/Getty

European stocks rose and US markets looked set for new record highs on Thursday, as US president Joe Biden began his first full day in office.

Asian stocks hit a record high overnight, after the S&P 500, Dow and Nasdaq all smashed records as Biden was sworn in and Democrats took control of the Senate on Wednesday.

Traders’ optimism grew over Biden’s $1.9bn (£1.4bn) stimulus plan, and they will have welcomed his speech on “bringing the country back together,” according to Michael Hewson, chief market analyst at CMC Markets UK.

European stocks opened higher. The FTSE 100 (^FTSE) rose 0.4%, the DAX (^GDAXI) gained 0.6%, and the CAC (^FCHI) was up 0.5%.

Investors’ attention will shift to a European Central Bank policy decision later in the day. The Bank of Japan kept rates unchanged overnight.

READ MORE: What a Joe Biden presidency means for Britain

“No changes are expected today, but it has been apparent over the past 12 months that the ECB has shown it is prepared to shift policy when required in order to support the European economy,” said Michael Hewson.

US markets also looked set to hit new peaks. S&P 500 futures (ES=F) were up 0.3%, Dow futures (YM=F) up 0.2%, and Nasdaq futures (NQ=F) 0.6% higher.

WATCH: The economic impact of Joe Biden’s relief plan

Biden began his term on Wednesday afternoon by signing a string of executive orders, on issues including tackling the pandemic, environmental protection measures, and rolling back many of the Trump administration’s immigration policies.

“I would have assumed coming into the year that had the Democrats swept the Senate, the House and won the presidency that the markets would have sold off on the back of a potential increase in the corporate tax rate in the future,” John Petrides, portfolio manager at Tocqueville Asset Management, told Yahoo Finance.

“Clearly I think investors are focused on the short term and Biden’s go-big policy on fiscal stimulus, which is clearly much needed as the COVID cases continue to rip through the US.”

MSCI’s index of Asia-Pacific shares outside Japan also hit a record high on Thursday, adding 0.9%.

Japan’s Nikkei (^N225) gained 0.8%. The Shanghai Composite (000001.SS) rose 1.1%, and the Shenzen Component (399001.SZ) rose 2%. Hong Kong’s Hang Seng index (^HSI) dipped 0.2%, however.

WATCH: What does a Biden presidency mean for the global economy?

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