Stocks rise after US vote, dollar falls against franc

US stocks rose sharply on 4 November after the Democrats' election victory. At the same time the dollar and the yields on US government bonds fell. At 14.04 New York time, 20.04 in Switzerland, the S&P 500 was up 1.8 percent according to Bloomberg. The Dow Jones gained 2.9 percent, the Nasdaq 100 1.2 percent. These are interim levels, not closing prices.

For Swiss investors the day therefore moved in two directions: US shares became more expensive, while the currency of these holdings lost value against the franc. How much of a price gain actually arrives in a Swiss portfolio therefore also depends on whether the dollar exposure is hedged.

Energy stocks fall despite the broad advance

The move was not a uniform rally across all sectors. Reuters reported gains in communication services, consumer discretionary and consumer staples. Energy companies, by contrast, were among the losers as crude oil prices fell. In the report updated in the afternoon, Brent crude was around nine percent lower at 94.50 dollars a barrel.

Within the previously volatile technology stocks the picture was mixed as well. After initial uncertainty about possible tighter AI rules, buyers returned. Bloomberg reported a rise of around three percent in an index of large technology companies. Greater parliamentary oversight does not yet mean that new restrictions on data centres have been decided.

Alongside the election outcome, corporate news moved prices. Bloomberg pointed among others to revenue forecasts from AMD and Super Micro Computer that came in above analyst expectations. Anyone attributing every move solely to the new political majorities therefore overlooks the earnings season running at the same time.

In Europe the broad Stoxx 600 rose 1.87 percent to a two-month high, according to Reuters. The global MSCI All-World index gained 1.56 percent. These indices cover different markets and can be equated neither with the Swiss SMI nor with the performance of an individual share.

Lower expected government spending supports bonds

On the bond markets investors bet on tighter limits to Trump's fiscal agenda. Market strategists justified the purchases to the agencies with the expectation that divided power in Washington could make further large spending programmes or tax cuts more difficult. That is a market assessment of future decisions, not a savings decision already adopted.

Rising bond prices go hand in hand with falling yields when payment promises stay unchanged. Bloomberg put the decline in the yield on ten-year US government bonds at seven basis points to 4.89 percent. Seven basis points correspond to 0.07 percentage points. The lower yield is therefore neither a fall of seven percent nor a change in the policy rate set by the US central bank.