Stocks hit record highs on vaccine, stimulus, Brexit deal hopes
LONDON (Dec 16) - World stocks rose to record highs on Wednesday as drugmakers rolled out COVID-19 vaccines and U.S. congressional leaders expressed optimism about a stimulus deal, with the upbeat mood dragging the safe-haven dollar to 2-1/2 year lows.
In Europe, markets were cheered by the possibility of a Brexit trade deal, better-than-expected euro zone PMI economic data and a European Central Bank decision to let euro zone banks start paying dividends again if they have enough capital.
Markets are watching the U.S. Federal Reserve later on Wednesday for hints that it will extend its stimulus programme, and for whether it thinks the economy will suffer a double-dip recession or is on the cusp of a vaccine-inspired boom.
E-mini futures for the S&P 500 were up 0.31%, after U.S. stocks climbed more than 1% overnight [.N].
CMC Markets’ senior analyst Michael Hewson said markets were being driven up by three main factors - “the hopes of U.S. stimulus, the hopes of a UK and EU (Brexit) trade deal and better-than-expected PMIs”.
“You have all three of these creating positivity and optimism,” he said, although he added that the impact of a new set of lockdowns in Europe was still to be felt.
The MSCI world stock index hit a record high of 636.64, and was later up 0.4%. The index has climbed 15% since the beginning of November, propelled by trillions of dollars worth of global stimulus.
European stocks rose 1% to nine-month highs, with the UK’s FTSE 100 index jumping 1.1%.
The MSCI broadest index of Asia Pacific shares outside of Japan was 0.9% higher. The region is also near record highs and up 3.8% so far in December, putting it track for its best yearly performance since 2017.
U.S. congressional leaders reported substantial progress on Tuesday after two meetings of top Democrats and Republicans to end a months-long standoff on coronavirus relief and finalize a $1.4 trillion funding bill to avert a government shutdown.
Sebastien Galy, macro strategist at Nordea Asset Management, said the prospect of a stimulus deal “is rightfully welcomed by the markets, but the size of the fiscal package is the issue”.
Reuters
