LONDON (Reuters) – Global stock markets hit record highs Monday, the first trading day of the new year, as investors hoped that the rollout of vaccines would eventually unseat a global economy decimated by the COVID-19 pandemic.
The Chinese yuan gained nearly 1% against the dollar, while the dollar has hit its lowest level against a basket of comparable currencies since April 2018. Bitcoin plunged 10% and fell below USD 30,000 after a blistering 800% rise since mid-March last year. .
By 1126 GMT, European stock indices were all higher, with the UK FTSE 100 at 2.76%, the German DAX at 1.3%, the Spanish IBEX at 1.36% and the Italian FTSE MIB at 1%. The pan-European STOXX 600 index was on track for its best day since November 9, up 1.6%. [.EU]
E-Mini futures for the S&P 500 were up 0.6% after also hitting an all-time high. [.N]
MSCI’s All-Country World Index, which tracks stocks in 49 countries, hit an all-time high, rising 0.6% on the same day.
“The year kicks off when 2020 ended, an all-rally with the double V dichotomy (virus vs. vaccine), where we see the hope that things get worse and the incentive increases or things get better and, well, things get better as long as there is no trace of liquidity withdrawal and a diminishing tantrum, ”said a trader.
Asian stock markets also gained, although Japan’s Nikkei 225 index lost early gains and fell 0.4% after Prime Minister Yoshihide Suga confirmed that the government is considering a state of emergency for Tokyo and three surrounding prefectures as the coronavirus spreads.
Despite optimism about vaccines, investors are still cautious about the path of the virus, which continues to spread amid the discovery of a new strain.
“The virus will continue to prevail for some time,” said Karl Steiner, lead quantitative strategist at SEB, noting that vaccinations have had an uneven start characterized by vaccine shortages, vaccine resistance and delays.
Britain began vaccinating its population on Monday with the COVID-19 shot developed by Oxford University and AstraZeneca.
With the lag between a full vaccine rollout and a global economic recovery, investors will rely on central banks to keep money cheap.
“We continue to believe that equities have even more room to rise in 2021 as monetary and fiscal stimulus offers tailwind, and we expect significant earnings growth as the global economy recovers,” said Mark Haefele, chief investment officer at UBS Global Wealth Management.
The minutes of the Federal Reserve’s December meeting are scheduled for Wednesday and should include more detail on discussions about making their future policy guidelines more explicit and the likelihood of further increases in asset buying this year.
EYES ON DATA
The data calendar includes a slew of manufacturing surveys around the world, showing how the industry is coping with the spread of the coronavirus, and the close ISM surveys of US factories and services.
Chinese factory activity continued to accelerate in December, although the PMI missed forecasts.
Japanese production stabilized for the first time in two years in December, while Taiwan recovered.
Friday sees the December US salary report which provides median predictions for only a modest increase of 100,000 jobs.
Analysts like Barclays show a 50,000 job decline, which would shock market expectations for a speedy recovery.
“A number of incoming indicators on activity point to slower momentum as the economy closes the year, including data on the labor markets where initial claims rose during the December survey period,” economist Michael Gapen said in a note.
Such a drop would put pressure on the Fed to ease further, another burden on the dollar already collapsing under the weight of the massive US budget and trade deficits.
In currencies, the euro pushed back to $ 1.2294 after making a profit late last week when it hit its highest level since early 2018 at $ 1.2309. It gained almost 9% in 2020.
The dollar fell to 102.80 yen. Sterling is up to $ 1.3690, levels last seen in mid-2018.
The drop in the dollar supported gold, keeping the metal stronger at $ 1,931 an ounce by 1.3%.
Oil prices continued to climb after a few months of solid gains, with Brent exceeding $ 53 a barrel. [O/R] US crude added 1% to $ 49 a barrel.
Reporting by Ritvik Carvalho; additional reporting by Carolyn Cohn in London and Wayne Cole in Sydney; Editing by Toby Chopra