Global stock markets advanced this morning as investors expected a probable cut in US interest rates and sweeping republican victories in congressional elections to inject fresh life into the world's biggest economy.
Republicans, seen as more friendly to business, steamed to huge wins in midterm elections, keeping control of the House of Representatives and reclaiming the US Senate in what was a historic sweep for President George W. Bush.
US stock futures were up more than one per cent, pointing to another strong opening on Wall Street. In Europe too, shares looked poised to climb at the start of trading.
The dollar recovered from five-week lows against the yen as the currency markets watched the poll results and a US Federal Reserve meeting later today, which is widely expected to cut the key overnight rate by a quarter-point.
Analysts said Republican party gains could lead to further tax cuts and more defence spending, seen as positive for stocks. It would also give President Bush wider scope to push his global and domestic agenda - including tax cuts that could lead to more debt issuance.
The Federal Reserve's policy-making committee, meeting a day before rate-setting meetings of the European Central Bank and the Bank of England, may unleash a round of global easing.
It would be the Fed's first rate cut of the year, after cutting rates 11 times in 2001 to a 40-year low of 1.75 per cent.