U.S. stock futures and the dollar rose, while Treasury notes fell as President George W. Bush led Democratic challenger John Kerry in vote counting in the race for U.S. president. Oil prices advanced. Speculation a second Bush administration would be more prone to larger fiscal deficits that contribute to a stronger economy helped stocks and the dollar. Record budget deficits, meanwhile, hurt Treasury securities by raising the prospect of increased debt sales. ``For the most part, the market sees Kerry as less business friendly,'' said David Spika, who helps manage $4 billion at Westwood Holdings Group Inc. in Dallas. ``It's hard to find areas that would really benefit from the proposed legislation that Kerry has talked about.''
Standard & Poor's 500 Index futures expiring in December rose 1 percent to 1144.80. Nasdaq-100 Index futures rose 1.8 percent to 1524.5 at 3:31 p.m. in Tokyo. Dow Jones index futures added 1.2 percent to 10,160. Against the euro, the dollar advanced to $1.2664 from $1.2744 late yesterday in New York, according to EBS, an electronic currency-trading system. It climbed to 106.57 yen from 106.06 The 4 1/4 percent note due in August 2014 fell almost a point, or $10 per $1,000 face amount, to 100 11/16, according to New York-based bond broker Cantor Fitzgerald LP. The yield rose 11 basis points to 4.16 percent, the biggest jump since July. A basis point is 0.01 percentage point.
Vote Count
Bush may have won as many as 269 of the 270 Electoral College votes needed to capture the U.S. presidential election, Fox News and NBC News reported. The two networks called Ohio for Bush. Senator John Kerry garnered 221 as voting ended in most states, television networks projected. ``The vote count in Ohio has not been completed,'' said Kerry-Edwards campaign manager Mary Beth Cahill in a statement. ``There are more than 250,000 remaining votes to be counted. We believe when they are, John Kerry will win Ohio.'' Including Ohio, Bush would have victories in 28 states so far. Kerry claimed 17 plus Washington D.C. Both the Kerry and Bush campaigns said Ohio's vote may tip the election. Kerry won Pennsylvania, the networks said earlier. ``Markets are upbeat about continuity with what they view as a business-friendly government,'' said Lara Rhame, currency strategist in New York at Credit Suisse First Boston. ``The markets definitely seem to like a Bush win.'' Crude oil rose 1.5 percent to $50.38 per barrel in after- hours electronic trading on the New York Mercantile Exchange, and is up 90 percent in the past year.
Stalemate Scenario
Speculation Bush will wrap up a victory as early as today allayed concern about a potential repeat of the stalemate seen in the 2000 election, which hurt both the dollar and stocks. ``A clear-cut decision tends to favor a stronger U.S. dollar,'' said David Durrant, chief currency strategist in New York at Bank Julius Baer & Co., which manages $95 billion. In 2000, the dollar and the Standard & Poor's 500 Index fell and Treasury notes rallied in the five-week span between Election Day and Dec. 13, the day Democratic candidate Al Gore conceded. The dollar lost 2 percent against the euro between Election Day and Dec. 13, The Standard & Poor's 500 Index shed 5 percent in that period, while benchmark 10-year Treasury notes rallied, driving yields down to 5.26 percent from 5.87 percent.
The U.S. budget deficit reached a record $413 billion in the year through September. The Treasury Department sells more debt to finance its deficits, and increasing supply of notes and bills may push prices lower and yields higher. Barclays Capital Inc. and Banc of America LLC are among the primary dealers expecting the deficit to exceed $300 billion for at least another two years. The Treasury yesterday predicted the government would need to borrow $100 billion in the final quarter of this year and a record $147 billion in the first three months of 2005. ``Bush is more fiscally expansionary,'' said Scott Gewirtz, co-head of U.S. Treasury trading in New York at Deutsche Bank AG, one of the 22 primary U.S. government securities dealers that trade with the Fed's New York branch. ``He doesn't care about the deficit so much. It means lots of bonds'' and is better for stocks. ////www.bloomberg.com