LONDON (Reuters) – Global stocks rallied for the fourth consecutive day on Tuesday and oil followed as hopes for fresh US stimulus packages set a strong end to the year for riskier assets and the dollar watched lows for two and a half years.
The MSCI World Index rose 0.4% at 1010 GMT, extending its recent recovery from gains in Asia, where Japanese stocks hit a 30-year high. MSCI’s widest index of Asia-Pacific stocks outside Japan rose 0.5%.
Early gains in Europe were broad-based, with all major indices rising, led by Britain’s blue chip stocks. They rose on their first trading day since the Christmas Eve deal of a trade deal with the European Union.
The FTSE 100 was up 2.4%, on track for its fourth consecutive day of earnings led by companies in a range of sectors likely to benefit from the deal, including Intertek and Diageo.
“Multinational corporations, most likely to benefit from frictionless, tariff-free trade and foreign exchange earnings, are generally at the forefront of the FTSE 100,” said Russ Mold, investment director at AJ Bell.
The London market was supported by banks and other financial services.
“This suggests that the nerves remain as to what deal will be struck in 2021 when it comes to financial services and even services in general.”
Also among the winners was drug company AstraZeneca, buoyed by news that the COVID-19 vaccine will be approved by the UK government for emergency use within days.
The launch of the European Union’s vaccination program, hoping to end the widespread lockdowns that have brought economies across the bloc to a halt, saw that positive sentiment shared with the continent, where travel and leisure stocks precipitated by 2% rose.
US stock futures also point to a 0.5% higher opening on Wall Street later in the day, bolstered by the hope that a $ 2.3 trillion stimulus package signed into law by President Trump on Sunday will be approved by the Senate .
The package includes $ 1.4 trillion in spending on government agencies and $ 892 billion in COVID-19 emergency relief, including $ 2,000 emergency checks to mitigate the pandemic’s economic impact.
The prospect of increased demand helped drive oil prices, with Brent crude oil futures and US West Texas Intermediate both at around 1.3%.
Demand for riskier assets weakened the US dollar, which is often seen as a safe haven. It was down 0.2% against a basket of currencies and in view of its 18-month low in November.
Going short to the dollar has been a popular trade. Calculations by Reuters based on data released by the Commodity Futures Trading Commission on Monday suggested this trend would continue. Dollar short positions increased to $ 26.6 billion in the week ending December 21, the highest in three months.
Among other currencies, the pound gained 0.2% against the dollar, reversing two days of losses, albeit from its previous high. The euro climbed for the third day in a row, up 0.3%, supported in part by talks of a trade pact between the EU and China.
Yields on European sovereign debt fell slightly, with blue-chip 10-year German bond yields of 0.57% and riskier Italian, Spanish and Portuguese yields also lower.
A slow dollar supported the gold price, which rose 0.5% to $ 1,878.9 an ounce. [GOL/]