Stocks rise, bonds slide as investors bet on Bush

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Singapore, Nov 3: Investors grew confident on Wednesday that President George W Bush would win re-election, pushing up US stock futures and the dollar, after TV networks said he had won the key swing state of Ohio.

Oil prices rose back above $50 a barrel and Asian stocks firmed to six-month highs as network projections showed Mr Bush taking a lead over Democratic Senator John Kerry.

US Treasury prices slid after TV reports that Mr Bush had won the closely fought state of Ohio, whose 20 votes would put him on track for the 270 needed to win.

Investors were already leaning towards a victory for market-favourite Mr Bush after the President was projected to win Florida, another key swing state.

“I think the equity market always felt Nr Bush was its friendly candidate,” partly because of concern Mr Kerry would reverse Mr Bush’s tax cuts, said Charles Gabriel, head of Washington research at Prudential Securities.

S&P 500 Stock futures were up 1.4% after the Ohio reports, building on an earlier gain of 0.8%. The benchmark 10-year note fell a full point in price for a yield of 4.18%, up from 4.08% on Monday.

“Mr Kerry hasn’t really been able to cross over into any of the Mr Bush states,” said JP Marra, managing director of government bond trading at Lehman Brothers. “The bond market’s move is more just a reaction to what stocks would do.”

As the results rolled in during the Asian trading day, an MSCI index of Asia-Pacific shares outside Japan rose 1.1% to its highest level since mid-April. The Tokyo market was closed for a holiday.

Wall Street is seen as most comfortable with a win for Mr Bush, whose tax cuts are viewed by many as a boon to equities. The Dow Jones industrial average had closed 0.2% lower on Tuesday after Web sites suggested Mr Kerry was leading Mr Bush in exit polls for key states.

When the TV projections failed to support that, foreign exchange traders pushed the US currency higher, said Michael Woolfolk, a currency strategist at Bank of New York.

“It’s looking like the evening could produce a clear winner. I would think that as a decisive election victory comes into focus tonight that the market becomes increasingly confident about taking the euro back to $1.25,” he said.