Investors grew confident on Wednesday that President George W. Bush would win re-election, pushing up U.S. 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 Bush leading Democratic Senator John Kerry by 246 electoral votes to 217. U.S. Treasury prices slid after TV reports that 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 Bush after the president was projected to win Florida, another key swing state.
"I think the equity market always felt Bush was its friendly candidate," partly because of concern Kerry would reverse Bush's tax cuts, said Charles Gabriel, head of Washington research at Prudential Securities. S&P 500 stock futures were up 1.4 percent after the Ohio reports, building on an earlier gain of 0.8 percent. The benchmark 10-year note fell a full point in price for a yield of 4.18 percent, up from 4.08 percent on Monday. "Kerry hasn't really been able to cross over into any of the Bush states," said J.P. 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 <.MSCIAPJ> rose 1.1 percent 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 Bush, whose tax cuts are viewed by many as a boon to equities. The Dow Jones industrial average <.DJI> had closed 0.2 percent lower on Tuesday after Web sites suggested Kerry was leading Bush in exit polls for key states.
DOLLAR BOUGHT BACK
When the TV projections failed to support that, foreign exchange traders pushed the U.S. 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. The euro eased to $1.2682 in trade thinned by the holiday in Japan from $1.2725 in New York. The dollar edged up almost half a yen to around 106.42 yen . U.S. crude oil futures rose, with some analysts saying a Bush win could fuel nervousness about U.S. policy in the oil-producing Middle East, particularly Iran. Analysts say a victory for Kerry would mean cheaper oil as he has said he would stop filling U.S. strategic reserve at current high prices and encourage more fuel efficiencies. U.S. light crude was up 71 cents at $50.3 a barrel after closing under $50 on Tuesday for the first time since Oct. 4.
ASIAN STOCKS RISE
In Asian stock trade, benchmark indices rose 1.8 percent in Taiwan <.TWII>, 1.5 percent in South Korea <.KS11> and 0.9 percent in Australia <.AXJO>, where the market hit the latest in a long string of record highs. Hong Kong <.HSI> rose 0.2 percent and Singapore <.STI> advanced half a percent. Spot gold dipped to $419.50 an ounce from $420.00 in New York as the firmer dollar made the metal more expensive for holders of other currencies. Some dealers said a Kerry victory may encourage investors to ditch equities and seek hard assets such as gold while waiting for new government policies. On Tuesday, the Dow Jones industrial average <.DJI> ended down 0.19 percent at 10,035.73 and the Standard & Poor's 500 Index <.SPX> finished flat at 1,130.56. The Nasdaq Composite Index <.IXIC> closed up a quarter of a percent at 1,984.79. European shares closed at their highest level in more than six months on cheaper oil prices.///www..com