* Asian stock markets: https://tmsnrt.rs/2zpUAr4
From Swati Pandey
SYDNEY, November 9 (Reuters). Wall Street stock futures got off to a strong start on Monday as the dollar prolonged its downtrend as risk-weighted assets were bolstered by the expectation of fewer regulatory changes and more monetary stimulus under US President-elect Joe Biden.
The Democratic candidate’s victory in the US presidential election was largely priced in by the markets that traded on the view of a Biden presidency and a Republican-controlled Senate late last week.
The e-mini futures for the S&P 500 rose 0.6% on Monday, signaling a positive start for the US markets.
The broadest MSCI index for stocks in Asia Pacific outside Japan rose 0.1% after rising 6.2% last week to produce the best weekly performance since early June.
“What appears to be a divided government at this point offers more continuity in the current environment than the potential for far-reaching change,” said asset manager Jim Wilding of Confluence Financial Partners in Pennsylvania.
“We see this as a net positive for the equity markets, especially in this scenario, as the chances of higher taxes in the coming years are very slim,” he added.
Wilding was cautious, however, as the S&P 500 was not far from all-time highs.
“While we remain positive over the medium term, believing that a divided government will reduce the likelihood of a bear fall scenario, at current levels we would refrain from unbridled enthusiasm,” said Wilding.
National Australia Bank analyst Tapas Strickland said stocks rebounded sharply last week, with the S&P500 gaining 7.3% and posting its best earnings in an election week since 1932.
However, Matt Sherwood of Australian fund manager Perpetual said Biden’s win did not necessarily justify optimizing his portfolio.
“Ultimately, we think the US economy is still pretty fragile and that growth is slowing,” said Sherwood.
“You could potentially focus your portfolio more on higher beta markets like emerging markets, and there is the potential for better prospects in the energy sector than would have been a clean sweep by the Democrats.”
Analysts also warned that the path could become more difficult from here as investors focus on Biden’s ability to expand fiscal incentives and measures to reduce the spread of COVID-19.
The United States saw a record number of new coronavirus infections last week, with the total number of cases approaching 10 million.
According to analysts, despite a divided government, a fiscal stimulus plan is still possible, although a larger package is less likely. This puts the US Federal Reserve in the spotlight, doing more to strengthen the world’s largest economy.
As a result, the dollar has weakened in the past few days while growth reps like the Australian dollar have rallied with Biden’s presidency, which is less likely to face trading.
The dollar was slightly weaker against the Japanese yen at 103.25 after falling 1.3% last week.
The Aussie was up 0.3% after rising 3.3% last week.
Investor focus will also be on sterling and euro this week. Trade negotiations between the UK and the EU will come to a head with the EU summit on November 15th.
Later in the day, the Bank of England’s chief economist will deliver a speech on “The economic impact of the coronavirus and the long-term impact on the UK”
The euro, which was up 1.9% last week, was slightly higher on Monday at $ 1.1887. The pound sterling was slightly weaker at $ 1.3146.
The dollar index thus fell by 0.1%.
In commodities, oil prices rose slightly after Friday’s losses but remained below $ 40 a barrel as rising global coronavirus cases raised fears of weak demand.
Gold rose 0.36% to 1,958.7 per ounce with spot prices up.
(Reporting by Swati Pandey; Additional reporting by Tom Westbrook and Michelle Price; Editing by Daniel Wallis and Sam Holmes)