LONDON / SINGAPORE (Reuters) – World stocks hit new peaks and oil marched higher on Thursday as investors stockpiled risky assets in hopes of a US fiscal stimulus and the Federal Reserve’s promise to continue pumping money into the markets.
From stocks to safe-haven gold and volatile bitcoin, financial assets were in a festive mood. Bitcoin hit another record high after it first broke the USD 20,000 level on Wednesday.
Congressional negotiators “were nearing” a $ 900 billion COVID-19 bill that is expected to include $ 600- $ 700 in stimulus checks for individuals, lawmakers said Wednesday.
Such checks issued in the spring led to money flowing from gamblers to the stock markets and bitcoin, allowing stocks to quickly recover from the COVID-19 blow. A trader in London pointed to opportunities for a new, retail-led stock market.
The overall risky mood sent the dollar to 2-1 / 2 year lows against major peers as the MSCI world stock index hit a new high of 639.64. The index is up 16% since the end of October. Since then, multiple breakthroughs in the COVID-19 vaccine have been announced.
“While we expect equities to continue to benefit from positive news from the introduction of vaccines and US fiscal support, the same cannot be said for the US dollar,” said Mark Haefele, Chief Investment Officer at UBS Global Wealth Management.
“We see further (dollar) weakness ahead.”
European equities and the euro rebounded for the fourth consecutive session as investors built up positions in riskier assets ahead of a sharp economic recovery in 2021, supported by wider introduction of vaccines and extremely straightforward monetary policy.
The British pound hit its high in May 2018 in hopes of a post-Brexit trade deal.
In Asia, MSCI’s widest index of Asia-Pacific stocks outside Japan rose 0.6% to a record high. Japan’s Nikkei was up 0.2% – just behind its 29-year high. [.T]
Wall Street stock futures pointed towards more upside, with S&P 500 futures hitting record highs after the Nasdaq’s record closed on Wednesday.
(Image: Global Stock Indices 2020,)
SANTA RALLY
Brent crude futures were up 1.2% to $ 51.71 a barrel, the highest level since early March – before fears of overproduction and concerns about viruses pushed oil prices off a cliff. [O/R]
“My suspicion is that markets are looking to extend this rally for two reasons,” said Vishnu Varathan, chief economist at Mizuho in Singapore, citing support for US monetary policy and vaccine roll-out.
“If new contamination numbers don’t go crazy … I think there’s room for a so-called Santa gathering by the end of the year,” he said.
Jerome Powell, chairman of the US Federal Reserve, promised on Wednesday to keep pouring money into the markets until the US economic recovery is secure.
Bond traders were disappointed that he had not extended the Fed’s buying program deeper into the yield curve, and US Treasury bonds were sold at longer maturities, but others saw it as a sign that the bank was turning their back. [US/]
The Swiss National Bank maintained its ultra-expansionary monetary policy, maintained the lowest interest rates in the world and remained ready to launch currency interventions, despite being labeled a currency manipulator by the United States.
The Swiss Franc last stood at 0.8835.
Better-than-expected employment data in Australia propelled the Aussie to $ 0.7624, the strongest since mid-2018. [AUD/]
The Aussie is also high on soaring iron ore prices and a mood that has pushed currencies in Malaysia, Singapore, Thailand, Taiwan, Sweden and Norway to milestone highs. [EMRG/FRX]
The kiwi rose to its strongest since early 2018 after New Zealand’s economic growth exceeded expectations.
US government bonds stabilized, with the yield on ten-year benchmark bonds remaining stable at 0.9246%.
Cryptocurrency bitcoin expanded gains after breaking past $ 20,000 overnight. It was up 8% to $ 23,058. Investors are drawn to the momentum – it’s up 200% this year – and the perceived resistance to inflation due to the limited supply.
Gold rose 0.3% to $ 1,869 an ounce. [GOL/]
Edited by Timothy Heritage