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Stocks Ride Higher on Democrat Senate Win, Dollar Flounders

US Treasuries suffered their steepest selloff in months and the S&P 500 index made a record high after Democrat victories in two Georgia races handed them narrow control of the Senate and the power to pass their agenda.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.5% to just shy of a record high, led by jumps of more than 1.5% in South Korea’s chipmaker-heavy Kospi and Australia’s miner-and-bank heavy ASX 200.

Japan’s Nikkei rose 2% to its highest since 1990. S&P 500 futures rose 0.6% and Nasdaq 100 futures rose 0.9% as markets seemed to shake off a late New York session fade when chaotic protests in Washington unnerved traders.

“It’s basically a re-flation trade,” said Mathan Somasundaram, head of Sydney-based research firm Deep Data Analytics, who added that the Democrat sweep was unexpected by most investors and “changes a lot.”

“Even though its a razor-thin margin, it gives Democrats a two-year window (to pursue their agenda),” he said. “Anything that benefits from rising prices is going to do well…when you look at the policy settings they are trying to get through, it’s about printing (money for) Main Street and not Wall Street.”

Georgia voters elected the first Black senator in the state’s history, Raphael Warnock, and the Senate’s youngest member, Jon Ossoff. Together with Vice-President Kamala Harris’ tie-breaker vote, the wins allow the Democrats to control the chamber.

The subsequent bond selloff pushed the yield on benchmark 10-year US Treasuries over 1% for the first time since March. It steadied at 1.0422% on Wednesday.

The US dollar also sank as the result became clearer because currency traders reckon that big and growing US trade and budget deficits will weigh on the greenback.

The dollar struck an almost three-year low against the euro of $1.2349 and hovered near that level on Thursday. It also fell to multi-year troughs against the Aussie, kiwi and Swiss franc.

The exuberance was tempered by a selloff in tech stocks, as investors expect the sector to face taxes and regulations, and by unsettling scenes of protesters storming the Capitol to disrupt certifying Donald Trump’s electoral defeat.

Wall Street indexes eased from session highs as police evacuated lawmakers and struggled for more than three hours to clear the Capitol of Trump supporters.

“What give us a little bit of a pause is that the economy is still very fragile and I think it’s unlikely that Democrats are going to have as easy of a time as markets are trying to predict in passing some of these policies,” said Tim Chubb, chief investment officer at wealth advisor Girard in Pennsylvania.

Congress has since reconvened to resume the election certification. Shares in Twitter slipped slightly after hours when the social network said it had temporarily locked Trump’s account for violating the platform’s rules.

Meanwhile a US crackdown on Chinese companies appears to be deepening, with sources telling Reuters that the Trump administration is considering extending investment bans to tech giants Alibaba, and Tencent.

Shares in both fell about 3% in Hong Kong and shares in three Chinese telecom firms that the New York Stock Exchange has eventually decided to remove after a week of flip-flopping also fell heavily.

Oil prices hovered near a 10-month high, basking in the afterglow of a production cut promised by Saudi Arabia. Brent crude futures were last up 0.5% to $54.60 a barrel and U.S. crude futures rose 0.8% to $51.02 a barrel.

Gold was steady at $1,916 an ounce and bitcoin firm after making a fresh record high of $37,400.