Risk assets ticked slightly higher at the market open on Tuesday, despite thinner volumes, as market sentiment remains sustained by hopes of further stimulus in the US.
Most equity traders around the world welcomed the US Democrat victory for the control of the US Senate this morning as it sparked hope that this new “blue wave” could bring further regulation, tax hikes and, more importantly, further fiscal aid. These hopes are having a strong impact on market sentiment and specifically on cyclical assets as more and more investors, already in the future, are pricing in the economic recovery and the return of inflation. This renewed appetite towards these sectors may even offset the potential dip for tech shares this year after such a strong rally in 2020. Some investors, worried about valuation issues and possible bubbles in the tech markets may choose to use this sector as a “defensive” move this year while cyclical, energy and more generally industrial shares could be the top performers if economies successfully shake off the negative effects of Covid-19.
