© Reuters. People wearing protective face masks are reflected on a screen with the Nikkei index outside a Tokyo brokerage after a coronavirus outbreak
By Carolyn Cohn
LONDON (Reuters) – World stocks rose to record highs on Wednesday as the safe-haven dollar hit its lowest point in more than two and a half years, thanks to the prospect of effective coronavirus vaccines and more US fiscal stimulus.
European equities and the euro also received a boost after PMI economic data was better than expected and the European Central Bank decided on Tuesday to allow eurozone banks to return dividends if they have enough capital.
Markets will later look to the US Federal Reserve to see if it alludes to an extension of its stimulus program and if it thinks the economy will go through a double dip or be on the brink of a vaccine-inspired boom.
“We don’t expect much fireworks from the Fed today – they have already created very easy monetary conditions and the tone of their messages is persistently subdued,” said Marija Vertimane, senior strategist at State Street (NYSE 🙂 Global Markets. “This probably won’t change … in this meeting.”
Europe’s strong open position saw equities rise 1% to a nine-month high, with the UK jumping 1.3%.
The MSCI world stock index rose 0.4% to a record high of 636.64. The index is up 15% since the beginning of November, driven by trillions of dollars in global stimulus and a more positive outlook.
MSCI’s widest index of Asia-Pacific stocks outside Japan followed Wall Street’s latest gains, finishing 0.9% higher. The region is also near record highs, up 3.8% so far in December, posting its best annual performance since 2017.
E-mini futures were up 0.25% as the Dow rose 1.1% overnight and the S&P 500 and Nasdaq gained 1.3% each. ().
Optimism over a US $ 1.4 trillion spending package grew after House Speaker Nancy Pelosi invited other congressional leaders to meet late Tuesday to seal a deal that will be ratified this week.
“Chances are that this deal is more than the $ 500 billion that the Republicans have proposed and probably less than the $ 900 billion of the joint proposal from the Republican / Democratic committee,” said Sebastien Galy, macro strategist at Nordea Asset Management. “It is rightly welcomed by the markets, but the size of the tax package is the problem.”
SHOT IN THE ARM
Progress in the roll-out of vaccines continued thereafter Moderna (NASDAQ 🙂 Inc’s COVID-19 vaccine appeared to be ready for regulatory approval this week.
The United States also expanded the rollout of the newly approved vaccine developed through Pfizer Inc. (NYSE 🙂 and BioNTech SE (NASDAQ :).
Analysts expect later in the day guidance on when and how the Fed might change its bond purchases.
The dollar fell to its lowest level since April 2018 against a basket of currencies. Derek Halpenny, MUFG’s head of research, said that “the high expectations underline that the Fed will send a signal today of continued loose monetary policy for the significant period ahead.”
The euro rallied above $ 1.22 for the first time since April 2018 and eurozone bond yields rose slightly, after data showed better than expected business in the bloc this month. [GVD/EUR]
The pound rose to a 12-day high against the dollar and a week high against the euro. It was won after European Commission President Ursula von der Leyen said there was progress on a Brexit trade deal and that the next few days would be critical.
The dollar fell to a one-and-a-half month low at 103.30 against the Japanese yen.
In Asia, the stock markets won. Australian equities rose 0.8%, South Korea rose 0.4% and added 0.2%.
China’s blue-chip CSI 300 index added 0.15% and Hong Kong’s at 0.86%.
In commodities, the gold price rose 0.4% to $ 1,860.20 an ounce. [GOL/]
Gold is up more than 22% so far this year amid unprecedented government stimulus worldwide.
fell 3 cents to $ 50.73 a barrel and declined 1 cent to $ 47.61. They were undermined by a surprising rise in crude oil inventories in the United States and ongoing investor concerns about the suppression of fuel demand amid tougher lockdowns in Europe to stem the coronavirus pandemic. [O/R]