Asia tracks Wall St rally as markets shrug at election limbo

Asian shares advanced Thursday after stocks rallied on Wall Street as investors embraced the upside of more gridlock in Washington, sending the S&P 500 index up 2.2% while the outcome of the U.S. presidential election remained in limbo.

Hong Kong's benchmark led the region, gaining 2.4%, while shares also rose by more than 1% in Tokyo and South Korea.

Overnight, the S&P 500 rose 2.2% for its best day in five months. The benchmark index had gained 3.5% before the market lost some of its momentum toward the end of the day.

The Nasdaq was the standout, notching its biggest gain in more than six months as traders doubled down on technology stocks. Health insurers were big winners, too, as prospects for an overhaul of the industry dimmed.

The S&P 500 rose 74.42 points to 3,443.44. The Dow added 1.3% to 27,847.66. The Nasdaq gained 3.9% to 11,590.78.

In Asia on Thursday, the Hang Seng in Hong Kong was at 25,483.08 while Tokyo's Nikkei 225 index climbed 15 TO 23,929.61. South Korea's Kospi jumped 1.5% to 2,393.03. In Australia, the S&P/ASX 200 gained 0.8% to 6,112.90. The Shanghai Composite index rose 0.6% to 3,297.34.

The futures for the S&P 500 and the Dow industrials both edged 0.1% higher.

"Notions that election uncertainty amid threat of a drawn out legal contest for the White House and Congressional gridlock (Democrat House-Republican Senate impasse) would have spooked markets couldn't be further from the truth though," Mizuho Bank said in a commentary. "Instead, markets have been happy to presume that this Democrat White . . . House and Republican Senate is the 'Goldilocks' outcome. In other words, a 'Goldilocks Gridlock."'

With Republicans edging closer to retaining control of the Senate, prospects dimmed for the tax increases and tighter regulations on businesses that investors expected if Democrats had scored an electoral sweep. A big stimulus effort for the economy that many economists and investors are pushing for now seems less likely.

By making additional stimulus less likely, a divided U.S. government could force the Federal Reserve to do even more on its own to support the economy, which could send the dollar lower against the euro and other currencies.

The Fed is meeting this week and had been due to announce its latest decision on interest rate policy on Thursday. But the central bank may hold off on determining whether and how to expand the economic support it has been supplying through ultra-low interest rates until after final election results are confirmed.

Its moves earlier this year to slash interest rates to record lows and prop up bond markets have helped Wall Street soar since March. It now faces more pressure for such changes given the failure of Congress to provide any further aid for struggling individuals and businesses.

Microsoft rose 4.8%, Amazon climbed 6.3%, Facebook surged 8.3%, and Google's parent company gained 6.1%.

Uber soared 14.6% and Lyft jumped 11.3% after the ride-hailing companies won a vote in California allowing them to continue classifying their drivers as contractors instead of employees and preserve their business models.

Other areas of the stock market, where profits are more dependent on the strength of the economy, lagged behind.

Some of the market's sharpest moves overnight were in yields for U.S. government bonds, which had earlier risen on growing expectations for big economic stimulus.

The 10-year Treasury yield swung from 0.88% late Tuesday up to 0.94% as polls were closing. It then sank as low as 0.75% after Trump made premature claims of victories in several key states, Republicans held onto Senate seats and a couple economic reports came in weaker than expected. It was at 0.74% early Thursday.

Many fund managers suggest investors hold steady. Stocks tend to rise regardless of which party controls the White House. What happens with the coronavirus pandemic is likely to have a much greater effect on markets than this election's results, they say.

The U.S. reported a record of more than 86,000 newly confirmed infections on Wednesday.

Cases and hospitalizations are setting records all around the country just as the holidays and winter approach, demonstrating the challenge that either President Donald Trump or former Vice President Joe Biden will face in the coming months.

In other trading:

U.S. benchmark crude oil lost 7 cents to $38.44 per barrel in electronic trading on the New York Mercantile Exchange. Overnight, it gained $1.49 to $39.15 per barrel. Brent crude, the international standard, also fell 7 cents, to $40.51 per barrel.