Asian shares climbed on Thursday and bonds extended their blistering rally as investors wagered the likely prospect of US policy gridlock would greatly favour some industries while putting a restraining hand on government borrowing.
The risk of a prolonged contested election remained, though the count was progressing in an orderly fashion with Democratic challenger Joe Biden narrowly ahead in key states.
MSCI's broadest index of Asia-Pacific shares outside Japan climbed 1.3% to reach its highest since February, 2018. Japan's Nikkei rose 1.1% to a nine-month top and South Korea put on 1.5%.
Chinese blue chips gained 0.8%, aided by talk a Biden White House might ease back on trade war tariffs.
E-Mini futures for the S&P 500 edged up 0.1%, after sharp gains overnight, while EUROSTOXX 50 futures eased 0.3%.
Both President Donald Trump and Biden have paths to 270 Electoral College votes as states tallied mail-in ballots. Biden remained optimistic on winning while the Republican incumbent filed lawsuits and demanded recounts.
Betting sites swung toward Biden as the results trickled in, having earlier heavily favoured Trump.
Yet the prospects of the Democrats taking the Senate also dimmed, pointing to deadlock should Biden take the White House.
"A Biden win without full Senate support means less risk of regulation and higher corporate/personal taxes," wrote analysts at Nomura in a note.
"Asset market reaction over the past 24 hours confirms this view, with the US10-year yields declining sharply, and US tech/WFH/structural growth stocks outperforming on prospects of less economic aid."
Technology and healthcare stocks duly led the charge higher overnight while those leveraged to consumer demand lagged. With tech stocks accounting for such a large share of the indices, the S&P 500 gained 2.20% and the Nasdaq 3.85%.
Bond markets assumed a divided government would greatly reduce the chance of debt-funded spending on stimulus and infrastructure next year, and thus less bond supply.
That saw 10-year Treasury yields tumble all the way back to 0.74%, having touched a five-month top of 0.93% at one stage on Wednesday.
The overnight drop of 11 basis points was the largest single-day move since the Covid-19 market panic of March.
The diminished chance of massive US fiscal stimulus will also pile pressure on central banks globally to inject further liquidity, just as the Federal Reserve and Bank of England hold policy meetings.
"Both could be interesting given the need for central banks to do more," said Chris Beauchamp, chief market analyst at IG.
"The Fed in particular will have to take up its QE role again with a weary sigh, in order perhaps to provide yet another bridge to the future when, hopefully, a government stimulus package will have been agreed."
A renewed focus on Fed easing could restrain the dollar, after a wild ride overnight. The dollar index was last at 93.433, a lot nearer Wednesday's low of 93.070 than the top of 94.308.
Likewise, the dollar settled back to 104.30 yen having briefly been as high as 105.32 overnight. The euro held at $1.1726, well away from a low of $1.1602.
Sterling had troubles of its own after the Telegraph newspaper reported the BoE was considering a move into negative interest rates.
That left the pound flat at $1.2966, compared with an overnight peak of $1.3139.
All the talk of policy easing put a floor under gold prices, leaving the metal a shade firmer at $1,907 an ounce.
Oil prices ran into some profit-taking. They had jumped overnight on speculation a deadlocked US government would be unable to pass major environmental legislation that favoured other forms of energy.
US crude eased back 73 cents to $38.42 a barrel, though that followed a rise of 4% on Wednesday, while Brent crude futures fell 79 cents to $40.44.