Markets get a bump despite Capitol chaos as Georgia secures Democrat control

Business leaders including Tim Cook react to unprecedented scenes in Washington DC

Police in riot gear sit in the rotunda of the US Capitol in Washington, DC. The House and Senate resumed a politically charged debate over the legitimacy of the presidential election hours after a pro-Trump mob stormed the Capitol and drove lawmakers from their chambers. BloombergShow less

As Congress returned to debating certification of the presidential election results, US stock futures gained, markets in Asia rose and business leaders issued sober words in response to the unprecedented violence. Contracts on the S&P 500 advanced 0.6 per cent as of 9am in the UAE.

The US Capitol had to be secured on Wednesday after rioters breached the building where lawmakers were formalising the election of Joe Biden. Four people were reportedly killed and 14 police officers injured.

But the markets took their cue from the Democrat victories in two votes in Georgia, which will ensure the party’s control of the Senate on top of the House of Representatives. Nasdaq 100 contracts climbed 0.9 per cent and those on the Dow Jones Industrial Average were up 0.5 per cent.

The cash market pared a gain that reached 1.5 per cent after Democrats made the Senate breakthrough, raising the prospect of a Biden presidency having more freedom to pour federal money into the US economy.

It ended higher by 0.6 per cent, while the Dow Jones Industrial Average hit a record. Nasdaq 100 Index contracts added 0.3 per cent.

Vivid footage of cowering lawmakers in Washington did not change investor confidence that president-elect Biden’s party control of Congress will deliver more robust aid for the economy. Technology shares took a dip while stocks in companies more closely tied to the economy’s performance, like energy producers, banks and travel companies, saw gains. Ten-year Treasury yields topped 1 per cent.

Asia stocks also rallied, all except Hong Kong which was pared back by declines in e-commerce giant Alibaba and media platform Tencent following news that the Trump administration may block investments in China’s two most valuable companies. The New York Stock Exchange’s decision to go ahead with delisting three major Chinese telecommunications firms also tempered appetite.

"Today marks a sad and shameful chapter in our nation's history," Apple chief executive Tim Cook tweeted on Thursday morning, calling the storming of the Capitol an "insurrection".

The Business Roundtable, a coalition of chief executives that began advocating for social responsibility by companies in 2019, tweeted a statement.

Microsoft president, Brad Smith, replied to the Roundtable’s statement, tweeting, “Well said. This is a day to speak up for our Constitution and its values.”

Microsoft's chief executive Satya Nadella retweeted Mr Smith's comment without further commentary.

Meanwhile, the two bodies of Congress still have to certify dozens of US states before completing their certification of the 2020 presidential election, which is seen as a symbolic part of the presidential election process.

Banks in the S&P 500 rose 4.4 per cent on Wednesday, the most since November 9 when Pfizer unveiled positive vaccine results, Bloomberg reported. They would benefit from higher Treasury yields that allow them to charge higher lending rates. Materials and energy producers added at least 3 per cent on speculation demand for capital projects will rise, while tech shares fell 1.8 per cent on concern the threat of inflation could make stretched valuations look worse.

US 10-year breakevens - a market gauge of inflation expectations over the next decade - topped 2 per cent this week for the first time since 2018, up for three consecutive months. With vaccine deployment still in early stages and Covid-19 cases still soaring, the market is seeing further signs of inflationary pressure that could start prompting bets on Fed rate hikes.