The Nikkei 225 index surged to its highest level since 1991 after news broke of Joe Biden’s victory in the US presidential election. This was the first day of trading following the announcement, and it had varying impacts on all Asian stock markets.
The Nikkei 225 is Japan’s primary stock index and rose by 2.5% on the day, reaching almost a 30-year high.
Positive News from Biden and Vaccines Boosts Asian Markets
Shares across Asia rose on the back of positive news from China, Hong Kong, and Australia. Even Japan Airlines’ 15% price drop did not dampen the enthusiasm for what has been dubbed the “Biden Bounce.”
What impact will the new US President have on trade relations with the US?
It is hoped that the new administration in the White House will use fiscal incentives to open up US markets and help reduce the spread of coronavirus.
Furthermore, the Chinese markets view the new administration as positive for US-China trade and technology policies.
Larry Hu, from Macquarie Bank, said:
“The political uncertainty is over now that the election is finished. The market views the Biden win positively, as he is unlikely to start a new trade war with China. The possibility of a new tech war is also decreasing.”
On Monday, the Shanghai Composite rose nearly 2%, hoping for improved trade relationships between the two superpowers, moving forward from the tariff wars that have been plaguing their economies since 2018.
Bruce Pang, from China Renaissance based in Hong Kong, said:
“We believe the Chinese authorities may be betting on a less confrontational but more predictable Biden administration that they can work with.”
Much of Japan’s gains were due to the car-making sector, where strong earnings have been seen in recent months.
Chris Weston, from Pepperstone brokers, commented:
“The Nikkei 225 is breaking out and is a poster child of strength and momentum.”
Even the news that Japan Airlines is raising capital to deal with its COVID-19 worries failed to dampen the optimism felt by traders at the election of a new president who has a stronger commitment to international trade.