Back in the UK, meanwhile, a grim week for job losses has become even worse.

The Edinburgh Woollen Mill chain and the homewares retailer Ponden Home have called in administrators, meaning more than 860 people have immediately lost their jobs and a further 2,000 roles are at risk.

My colleague Sarah Butler has the details:

The two chains will continue to trade online, and in stores where possible, while administrators seek options for their future, including potential buyers.

The job losses mainly relate to the permanent closure of 56 Edinburgh Woollen Mill stores and eight Ponden Home stores and concessions.

The latest cuts come after a dismal week for retail workers in which more than 5,700 more jobs came under threat. Sainsbury’s said up to 3,500 jobs could go as it shut four in five of its Argos high street stores and closed fresh fish, meat and deli counters, while John Lewis is cutting 1,500 head office jobs and footwear brand Clarks could lose an estimated 700 jobs in stores.

Wall Street will keep trading for a few hours yet (until 4pm EST or 9pm GMT). But with Europe and Asia-Pacific markets closed, we’re looking at the best week for world markets since April.

Reuters has the details:

Global stock markets edged higher and the dollar sank to a two-month low on Friday as investors awaited final vote processing in the U.S. presidential election that showed Joe Biden on the verge of winning the White House.

Treasury yields rose on better-than-expected October employment data, while oil prices slid below $40 a barrel as new lockdowns in Europe to halt the surging COVID-19 pandemic dimmed the demand outlook.

MSCI’s all-country world stock index rose 0.19% to 592.5, adding to a week-long rally that has seen the benchmark for global equity markets advance more than 7%. The index is on course for its best week in nearly seven months.

Subadra Rajappa, head of U.S. rates strategy at Societe Generale in New York, says investors are welcoming some certainty:

“The market perhaps is starting to cheer there being some certainty to the election.

There was some skittishness to the bond market when elections were too close to call. So the risk premium associated with a prolonged election uncertainty gets priced out.”

Fawad Razaqzada, analyst at ThinkMarkets, says this week’s surging markets shows that investors are anticipate a much-needed, and long-awaited, stimulus package.

If, by the start of the new week, Biden is confirmed as the winner, we may well see some further strength for risk assets in the early parts of the week ahead. Judging by the big rally in equities this week, investors seemingly prefer a constrained new president at the White House.

A Biden win is likely to pave the way for a big fiscal stimulus package. While the Republicans at the senate will provide some resistance, the fact that Biden now has a mandate makes it less likely that they will block a bigger package than what they were previously prepared to sign.

Regardless of the stimulus package, a Republican-controlled senate will make it unlikely that Trump’s corporate tax cuts will be rolled back for years to come. So, government support will be there in one or another form to support the economic recovery.

Wall Street has now erased those early losses, with investors perhaps concluding that political events are now priced in.

The Dow and the S&P 500 are currently up 0.02% for the day, with some traders perhaps more interested in votes than shares.

That leaves the New York market up a punchy 7% for the week, the best in almost seven months.

Guy Foster, chief strategist at wealth manager Brewin Dolphin, also suspects Wall Street is pricing in a split government.

“Markets had a few days to get to grips with the fact that President-elect Biden was in prospect. They particularly like the fact that they can bid farewell to the chaos of Trump but without the higher taxes that a Democratic Senate might bring.

The one risk that is perhaps being understated is that the Democrats may yet take the Senate once the Georgia run-offs have occurred in January.”

This week’s strong rally shows that Wall Street is not alarmed by the prospect of a Biden presidency.

But it may also reflect the possibility of political gridlock (all depending on the eventual outcome of the two Senate seat races in Georgia).

Michael Strobaek, Global Chief Investment Officer at Credit Suisse, says that without a Blue Wave in Congress, higher corporate taxes or tighter reforms of energy and tech are less likely:

A split government will limit the ability of the Biden administration to push through any major legislative change. This means that further fiscal stimulus is likely to be less generous than what the Democrats proposed.

It also means that legislation that would be negative for equity markets in general (such as corporate tax hikes) or disruptive for individual sectors including pharmaceuticals, technology and energy is now less probable except where the president can act without congressional approval. The administration’s stance on trade policy is likely to shift moderately, with tariff threats far lower, in particular against Europe.

However, the tough stance on Chinese technology is likely to be maintained. In an initial reaction, stock markets rallied on the election outcome, indicating that market participants see the reduced likelihood of higher taxes and increased regulation as more important than the likely reduced stimulus.

Back in London, the FTSE 100 index has pushed higher.

The blue-chip index is up 23 points or 0.4% at 5929, which would be its highest close in over three weeks.

It’s also posted strong gains this week - up over 6% since Monday morning, which would be the best week since June (and nearly the best since the April recovery....)

The S&P 500 index is also on track for its best week in month.

This broad index of US listed companies has gained 7% this week - a very substantial rally - and its best weekly performance since April.

Despite opening slightly lower today, the Dow Jones industrial average is still enjoying its best week in months.

The Dow has surged by over 6.7% this week as the election race has unfolded.

That would be the biggest weekly rise since the first week of June (when it gained 6.8%).

If we get another rally today, the Dow would rack up the best week since April.

Technology and healthcare stocks are leading the fallers; including Microsoft (-2.2%), Apple (-2.1%); UnitedHealth (-2.2%) and Salesforce.com (-1.8%).

A timely reminder of the economic challenge ahead...

Unemployment rates declined among all major US worker groups in October, the BLS reports, but is notably higher for some groups than others:

The rate was 6.7% for adult men, 6.5% for adult women, 13.9% for teenagers, 6.0% for Whites, 10.8% for Blacks, 7.6% for Asians, and 8.8% for Hispanics.

My colleague Dominic Rushe wrote about the issue of racial economic inequality in the US last week, and how the pandemic has made the problem worse.

Black and Latino people are overrepresented in the leisure and hospitality industries that were hardest hit by quarantine measures and continue to suffer as tourism and travel remain depressed.

Only one in four Americans has a job that allows them to work from home, according to the Bureau of Labor Statistics. And people of color represent the largest share of those whose jobs cannot be done from their kitchen tables.

The number of Americans temporarily laid off fell by 1.4m last month, to 3.2m.

That’s down from 18.1m in April, but still 2.4 million higher than in February, the BLS says.

However, there’s less progress on those permanently unemployment, points out Jason Furman, who chaired Barack Obama’s Council of Economic Advisers:

The US Bureau of Labor Statistics reports that the US private sector created 906,000 new jobs last month.

Government jobs fell by 268,000, though, partly due to the loss of 147,000 temporary 2020 Census workers.

This meant the overall Non-Farm Payroll rose by 638,000.

The BLS says:

These improvements in the labor market reflect the continued resumption of economic activity that had been curtailed due to the coronavirus (COVID-19) pandemic and efforts to contain it.

In October, notable job gains occurred in leisure and hospitality, professional and business services, retail trade, and construction. Employment in government declined.

September’s non-farm Payroll has been revised higher.

It shows the US economy created 672,000 new jobs in September, up from 661,000 previously.

European stocks are still subdued, as we await the US jobs report in around 15 minutes.

• FTSE 100: down 14 points or 0.25% at 5891
• German DAX: down 150 points or 1.2% at 12,417
• French CAC: down 50 points or 1% at 4,933

Michael Hewson of CMC Markets says:

The most probable outcome still looks like a Democrat win with Joe Biden winning the Presidency, however nagging doubts remain that the eventual outcome may well end up in the US courts.

For now, financial markets don’t appear too concerned about that this, however it would still seem prudent to take some money off the table as we head into the weekend, and today’s US payrolls report.

Kevin Boscher, chief investment officer at Ravenscroft, has predicted that Washington will agree a stimulus package once the election is done and dusted.

However, it probably won’t match the $3trn deal that the Democrats pushed for, unsuccessfully, this year.

Boscher reckons the most likely scenario is a narrow win for Joe Biden but with the Republicans retaining control of the Senate [not yet certain] and making some modest gains in the House.

A split Senate would give Kamala Harris the tie-breaking vote, but still leave challenges, he writes...

Biden’s legislative agenda will be at the mercy of either the majority Republican Senate or their blocking filibuster tactic if they fail to win the majority. Other more moderate Democrats could also spoil the party. Hence, it is much less likely that Biden will be able to pursue his more progressive “green” infrastructure stimulus deal. It will also be much more difficult to pass many of his other favourite initiatives, including the proposed tax increases, changes to healthcare and increased regulation. Biden would need to try to negotiate with the Republicans via the budget reconciliation process and using his executive powers. Alternatively, he might need to move to outlaw the filibuster tactic, although this would probably be met with resistance and traditional Democrats in the Senate appear reluctant to change the rules.

Despite the uncertainty, I believe there is a good chance that a new fiscal package will be agreed before Inauguration Day next January, although the size of any deal is likely to be considerably smaller than the Democrats would like.

Back in the foreign exchange markets, the US dollar has dipped against a basket of other currencies so far today.

That adds to this week’s earlier losses, sending the greenback towards two-year lows.

As the US dollar is a safe-haven, this suggests the markets are not panicking about the political situation in America.

Lee Hardman, currency expert at Japan’s MUFG bank, explains:

The US dollar has weakened across the board over the past week in anticipation of Joe Biden becoming the President.

The Australian dollar (+3.4% vs. USD), Norwegian krone (+3.3%) and New Zealand dollar (2.6%) have been the best performing G10 currencies that have benefited from the improvement in risk sentiment as global equity markets have rebounded.

Traders may also be pricing in the prospect that US monetary policy remains extremely loose for some time. Yesterday, Federal Reserve chair Jerome Powell that the US economy needs more support.

Ideally, that would come from the fiscal side - through a sizeable Covid-19 stimulus package that couldn’t be agreed before the election. But if that can’t happen (and a lot depends on those Senate races), then the burden will fall on the Fed.

Here’s an idea to ponder while we wait for US election results - should government bonds be linked to economic performance?

Government borrowing is a hot issue in the UK right now.

The cost of the pandemic has meant record monthly borrowing, with economists predicting that the new England lockdown - and the extension of the furlough scheme - could mean a deficit of £400bn this year, more than twice the previous record.

UK borrowing costs are currently at record lows, helped by the Bank of England’s QE scheme (expanded again yesterday). But some politicians are concerned about the long-term debt burden, while others fear that tightening fiscal policy (higher taxes, or lower spending) will derail growth and make the situation worse.

Professor Costas Milas of Liverpool University suggests a solution - link the interest rate paid to investors holding government debt to economic performance. He writes:

The International Monetary Fund predicts that the UK’s budget deficit will jump from 2.2% of GDP in 2019 to 16.5% of GDP in 2020 whereas its gross debt will jump from 85.3% of GDP in 2019 to 108% in 2020.

This borrowing will have to be paid back in the future. To raise the money, Sunak will have to increase taxes and/or cut public expenditure in the not-so-distant future. Which brings into the picture the urgent need for government bonds to be linked to GDP.

The idea here is that the interest due on GDP-linked bonds would go up or down depending on the issuing country’s economic performance. When GDP growth is weak, its debt-servicing costs will decline. The ratio of its debt to GDP will therefore rise less sharply during a downturn, thus reducing the need for austerity to bring down the debt pile later. On the other hand, when GDP growth is strong and tax revenues are on the rise, the debt-servicing costs will increase.

In other words, the UK would have to pay more when it could afford it, and significantly less when it could not. In fact, recent research at the Bank of England suggests that yields on these hypothetical bonds would be lower than those on conventional US bonds.

Needless to say, once many countries issue these bonds, these can become part of a well-diversified portfolio which will allow investors to share risk and benefit from growth.

Here’s the full piece: With a W-shaped recession looming and debt piling up, the government should start issuing GDP-linked bonds

The possibility that control of the US Senate might not be clear until January is also keeping investors on edge today.

As flagged earlier, there’s a chance that Georgia could host two Senate runoffs votes early next year. One is certain, while the second depends if Republican David Perdue can hit the 50% threshold for victory in a multi-candidate battle.

If both races did go to runoffs – and Democrats were to win them – it would leave the Senate split 50-50 [assuming that the Republicans held the other two outstanding seats, in North Carolina and Alaska, as seems probable].

If the Senate is tied, then the vice-president has the casting vote.

So this is very significant for the markets. Investors had been anticipating gridlock - meaning less chance of a really meaningful stimulus package.

However, if the Democrats controlled the Senate and the White House, then a multi-trillion dollar Covid-19 aid package becomes more likely -- with a knock-on impact on borrowing, future growth prospects, unemployment, household spending, etc,

It also has implications for tax reforms, and tighter regulation of tech companies.

Here’s the FT’s take:

The tight race for the US Senate, which is controlled by Republicans, was pivotal to the investment outlook, investors said.

Fading expectations that Democrats would be able to take control of the upper house of Congress triggered a sharp rally in US government bonds this week but the outcome has become murkier in the days following Tuesday’s election. Democrats are projected to maintain control of the House of Representatives.

The Senate race “is of utmost importance for US bond markets because political gridlock may stand in the way of a powerful fiscal stimulus”, said analysts at UniCredit, who said a Democratic clean sweep would have led to the approval of a large stimulus package.

“There is the possibility that we will see two run-offs in Georgia on January 5, which would leave bond markets guessing and might dampen directional momentum for several weeks,” the analysts added.

The US stock market is currently on track to open a little lower, with investors awaiting the latest Non-Farm Payroll jobs report as well as election news.

The Dow Jones industrial average is down 0.5% in the futures market, with the S&P 500 dipping 0.66% and the tech-focused Nasdaq on track for a 1% decline

But trading doesn’t begin for more than three hours, so this could change.

And it follows a strong rally of around 2% yesterday, as Joe Biden moved narrowly ahead in the presidential race.

Neil Wilson of Markets.com says investors are ‘consolidating’ this week’s gains.

Votes continue to be counted in a number of key battleground states and whilst Donald Trump is pursuing legal avenues, his chances of getting anywhere appear slim. So far courts have thrown out his appeals.

Moreover, Joe Biden is closing the gap in those states still counting and these last bastions of hope for the President could also flip.

The oil price has also dropped today.

Brent crude, the global benchmark, is down 2.5% at $39.89 per barrel - moving back towards the four-month lows seen at the end of October.

But as you can see here, oil had rallied sharply since the start of the week:

US election jitters, and anxiety over the Covid-19 pandemic, are weighing on the oil market today, reports Stephen Innes, chief global markets strategist at axi.

Oil is down due to lingering election uncertainty, and continued worries about spiking coronavirus infections in the US and Europe weigh on sentiment.

But, the possibility of the Opec group extending their current supply cuts for longer is providing some support, Innes adds.

The new lockdowns in several European countries are bound to hit energy demand - as shown by easyJet’s latest flight cuts.

European stock markets are dropping a little lower now, with the UK’s FTSE 100 now down 43 points or 0.7% today (but still up strongly since Monday).

After a very strong week, the strong post-election rally does seem to be fading... just as Joe Biden takes the lead in Georgia as the counting continues.

Alex Kuptsikevich, senior market analyst at FxPro, suggests there is some ‘end of the week profit-taking’, as investors look ahead:

Firstly, the results of the presidential election are yet to be finalised and are likely to be disputed. Secondly, there is a real risk that a divided Congress will argue for too long about a new relief package that has already been delayed since July.

The Covid-19 pandemic continues to hit the airline industry hard, with easyJet scaling back its flight plans yet again.

My colleague Kalyeena Makortoff explains:

EasyJet is cutting its flight schedule further after the introduction of new lockdown measures in the UK and mainland Europe, saying it will only run a maximum of 20% of planned flights for the rest of the year.

The airline said it was scaling back only days after the UK prime minister, Boris Johnson, announced fresh Covid-19 restrictions that ban residents in England from holidaying abroad or within the UK until 2 December. EasyJet said similar lockdown measures in Germany and France were also affecting flight plans.

The airline’s financial year begins in October and it said: “EasyJet now expects to fly no more than 20% of planned capacity for the first quarter.

The battle for the US Senate also took another twist last night, as my colleague Daniel Strauss explains:

Democratic hopes of wrenching control of the Senate from Republicans received an unexpected boost as it seems likely that two key races in the southern state of Georgia may be headed to runoff races.

One of the races is definitely headed to a second round in January, while a second Georgia contest and races in North Carolina and Alaska remain undecided, leaving the chamber now deadlocked 48-48. An outcome may now not be known until the new year.

Republicans look likely to win in North Carolina and Alaska, but Democrats would undoubtedly focus huge amounts of energy and money on trying to win the Georgia runoffs. If both races did go to runoffs – and Democrats were to win them – it would leave the Senate split 50-50, with the vice-president serving as a tie-breaker.

If Joe Biden is in the White House, that would mean a vice-president Kamala Harris would be the deciding vote in the Senate. If Donald Trump wins a second term, then it would be Mike Pence, the current vice-president.

This uncertainty may weigh on markets today too.

It’s been a long road for Japanese investors.

The Nikkei peaked in December 1989 at over 38,000 points, before the 80s asset-inflated bubble economy went spectacularly sour. The resulting crash, stagnation and deflation sent share prices tumbling - the Nikkei sunk towards 7,000 points after 2008 financial crisis.

The recent move towards Abenomics -- fiscal spending, ultraloose monetary policy and structural reforms -- have seen stocks move higher.

But as we wrote last December, former PM Shinzo Abe’s third arrow struggled to hit its target.

Abe has encouraged more women to enter the workforce and relaxed immigration laws to allow a modest number of blue-collar workers to fill gaps in pressurised sectors of the economy. But much needed reform of the labour market, corporate governance and healthcare have been slow to materialise.

The Nikkei’s jump to a 29-year closing high didn’t disguise some nervousness in the markets today.

As Reuters puts it:

While the election outcome hinged on a dwindling set of uncounted votes in a handful of battleground states, Biden maintained an edge over Trump. But uncertainty still loomed as the Republican incumbent mounts legal challenges to vote counts.

“The outcome of the election has not been confirmed... It is necessary to take a cautious stance from here on,” Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management said.

More here: Nikkei closes at near 3-decade high as Biden edges closer to win