GLOBAL MARKETS-Stocks fall, bond yields rise as investors brace for possible Democrat triumph in Georgia

By Hideyuki Sano and Imani Moise
TOKYO/NEW YORK, Jan 6 (Reuters) - Global stock prices
slipped and U.S. bond yields rose on Wednesday as investors
braced for the prospect that Democrats could win both races in a
U.S. Senate run-off election in Georgia, handing them control of
the crucial chamber.
Along with their narrow majority in the House of
Representatives, a 'blue sweep' of Congress could usher in
larger fiscal stimulus and pave the way for President-elect Joe
Biden to push through greater corporate regulation and higher
taxes.
Democrat candidates took early leads in the twin Georgia
Senate races, though the outcome may remain in doubt for days if
the margins are razor-thin. "Having control over both the legislative and executive
branches could theoretically lead to sweeping changes to
policy," said Vasu Menon, investment strategy executive director
at OCBC Bank.
"With Biden proposing to reverse President Donald Trump's
tax cut, increase the minimum wage, and strengthen oversight on
various industries, some might argue that his agenda is not
particularly market-friendly."
Futures for the S&P 500 EScv1 fell 0.43%, while Nasdaq
futures NQc1 shed 0.7% on fears Democrats could pursue tighter
regulations on big tech firms.
Other industries, such as banks, oil and gas and healthcare,
could come under heavier scrutiny, while infrastructure and
alternative energy sectors could benefit. Japan's Nikkei .N225 fell 0.4% while MSCI's index of
Asian-Pacific excluding Japan .MIAPJ0000PUS erased earlier
gains to stand almost flat.
The 10-year U.S. Treasuries yield rose to as high as 0.987%
US10YT=RR , the highest level since March, on expectations of
larger government borrowing.
"A market pullback seems both reasonable and healthy. But
stocks won't plunge to zero because there is a countervailing
positive here," said Phil Orlando, Chief Equity Market
Strategist, Federated Hermes of a potential Democratic sweep.
"A Biden honeymoon with Democratic Congress helmed by Nancy
Pelosi and Charles Schumer would likely lead to more fiscal
stimulus and infrastructure spending. That would serve as a
temporary sugar high for stocks in 2021 before the bill comes
due in 2022."
Adding to broader uncertainty in markets was the latest
twist in a regulatory saga over whether the New York Stock
Exchange would delist three Chinese telecom giants on security
grounds. Shanghai stocks extended gains on Wednesday, with the CSI300
index .CSI300 rising 0.5% to reach its best levels since 2008.
Oil prices held firm, maintaining their gains of nearly 5%
made on Tuesday after Saudi Arabia offered to make voluntary
cuts to its oil output. Tensions following OPEC member Iran's seizure of a South
Korean vessel also frayed nerves, adding further support to the
market.
Tehran denied on Tuesday it was using the ship and its crew
as hostages, a day after it seized the tanker in the Gulf while
pressing a demand for Seoul to release $7 billion in funds
frozen under U.S. sanctions. U.S. crude futures CLc1 were almost flat at $49.95 a
barrel after having climbed 4.9% on Tuesday.
International benchmark Brent crude futures LCOc1 stood
firm at $53.45 after a gain of 4.9% on Tuesday.
In currencies, the U.S. dollar hit a new low before bouncing
back on the prospects of the 'blue sweep' in Georgia.
The euro rose to as high as $1.2328 EUR= , a high last seen
in April 2018, while the yen hit a 10-month high of 102.595 to
the dollar JPY= .
Spot gold XAU= held firm at $1,948.20 an ounce, having
touched a two-month high earlier in the day.
Bitcoin traded at $33,904 BTC=BTSP , near record high of
$34,800 set on Sunday.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Global assets http://tmsnrt.rs/2jvdmXl
Global currencies vs. dollar http://tmsnrt.rs/2egbfVh
Emerging markets http://tmsnrt.rs/2ihRugV
MSCI All Country Wolrd Index Market Cap http://tmsnrt.rs/2EmTD6j
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(Additional eporting by Scott Murdoch in Hong Kong; Editing by
Sam Holmes and Kenneth Maxwell)