U.S. equities gained, the dollar dropped and Treasuries climbed as investors seemed to cheer on an outlook for a divided Congress in the wake of the American midterm elections.
Risky assets were in favor after results showed Democrats winning control of the House of Representatives and Republicans holding on to the Senate. The outcome dims chances that President Donald Trump's signature tax cuts will be reversed, but also makes it less likely Washington will be able to push through other major fiscal initiatives that might have pushed yields higher. Overall, investors are betting that the election results won't do much to disrupt an economy growing at a healthy 3% clip and they can focus elsewhere.
The outcome largely matched polling going into the vote. The biggest macro theme remains the trade war after recent warnings from major names including the International Monetary Fund's Christine Lagarde and former U.S. Treasury Secretary Henry Paulson. Meanwhile, the Italian government is holding a confidence vote Wednesday, the Federal Reserve is set to decide interest rates Thursday, and Theresa May is pushing on with efforts to agree a Brexit deal.
Elsewhere, European stocks rallied and Asian shares were mixed.
Early Wednesday morning, the S&P 500 climbed 0.9% as of 9:32 a.m. EST. The Stoxx Europe 600 Index rose 1% to the highest in four weeks; the U.K.'s FTSE 100 Index rose 1%; and Germany's DAX Index rose 0.9%.
