Futures on big US technology companies advanced in early trading in Asia on Thursday, as investors awaited results from some of the final battleground states that will decide the US election.

Nasdaq 100 futures climbed 0.9 per cent while S&P 500 futures pointed to a narrower 0.5 per cent gain, a day after US stocks posted their best daily performance after an election.

Treasuries also continued to strengthen, with the yield on the 10-year note falling 0.03 percentage points to 0.74 per cent.

Investors had bet on a reflation trade, the idea that a big Democratic victory would lead to a substantial stimulus that would fuel growth. But that has started to reverse as Joe Biden won key battleground states including Wisconsin and Michigan but the Senate remained in the balance as several races were too close to call. Investors had returned to the top-performing parts of the market on Wednesday as they pencilled in lower stimulus spending and growth in the US.

“You go back to the old playbook of growth stocks that will outperform,” said Jurrien Timmer, director of global macro at Fidelity. “The market is assuming it will not be contested or we would be on the back heels.”

The global stocks surge comes despite mounting concerns that Donald Trump will seek to undermine the results when they are eventually finalised. The president’s campaign has already filed multiple lawsuits in critical swing states, including Pennsylvania and Georgia. Mr Trump has also called for a recount in Wisconsin.

Eric Stein, chief investment officer for fixed income at Eaton Vance, said investors were “looking through” the interim period of uncertainty.

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“The market appears to be saying it could get messy, but it isn’t something that will be as material of a risk as people were worried about before,” he added.

Measures of volatility in both equity and Treasury markets collapsed on Wednesday as the election results came into view. Results out of Nevada on Thursday could prove the tipping point, with the state due to report a fuller tally by noon in New York.

Stocks in Asia climbed following the strong showing on Wall Street. The Hong Kong Hang Seng advanced 2.5 per cent while Japan’s Topix gained 0.6 per cent. The South Korean Kospi rose 1.6 per cent.

Via Financial Times