European equities reached 2021 with rising indexes, while the pound sterling hovered at its highest level since the beginning of 2018.
The European benchmark Stoxx 600 index rose 1.6 percent in Monday morning trading, while London’s FTSE 100 rose 2.9 percent, Germany’s Xetra Dax rose 1.3 percent and CAC 40 France rose 1.9 percent.
The gains in Asia also helped push the MSCI World Price Index to another record, exceeding the previous peak in late December.
Deutsche Bank strategist Jim Reid said the recent post-Christmas optimism was “supported by the approval of new Covid-19 aid in the US, which President Trump signed on December 27, as well as the agreement on a trade agreement Brexit between the UK and the EU. ”All eyes are now on the launch of vaccines, he added, with traders hopeful of a return to relative normality soon.
The pound sterling was stable at $ 1.3668 – remaining at levels not seen since the beginning of 2018 – following a Brexit trade agreement with the EU just before the end of last year.
The gains from the actions came despite the worsening of the pandemic, which led the UK’s prime minister, Boris Johnson, to put the country waiting for stricter social restrictions as infections increased.
The price of oil jumped, with the internationally renowned Brent crude oil rising 1.3% to $ 52.47 a barrel. The gains came before a decision by OPEC and Russia on cuts in production for February on Monday. “The price action today suggests that the market is assuming that Opec + will keep the cut level unchanged for next month,” said Warren Patterson, head of commodity strategy at ING.
In the US, futures indicate that the Wall Street benchmark, S&P 500, would increase 0.6 percent at the opening bell later in the day.
Analysts will closely monitor the second round of elections in Georgia this week, which will determine whether Democrats or Republicans control the US Senate. The result could have important implications for new President Joe Biden: if Democrats win both seats, the Senate will no longer be controlled by Republicans, giving Biden greater power to follow his legislative agenda.
“It could be a market event if Democrats won both seats in the Georgia Senate, which would allow Biden to further boost its tax and spending policy,” said Patrik Schowitz, global multi-active strategist at JPMorgan Asset Management. “It is quite possible that we could see a negative initial reaction from the stock markets on concerns about corporate taxes and regulation.”
In the Asia-Pacific region, China’s currency crossed the important 6.5 per dollar threshold for the first time since June 2018. The land-traded renminbi rose 1 percent to Rmb6.4562 per dollar on Monday, while the dollar, measured against a basket of its trading peers, fell 0.5 percent.
The renminbi has already erased most of the losses it has suffered against the dollar since President Donald Trump started a trade war between countries. The currency was boosted in part due to the country’s economic recovery from the coronavirus pandemic and hopes that the next Biden government could lead to reduced tensions between Beijing and Washington.
Asian stocks also rose with the return of traders on the New Year holiday. Mainland China ‘s CSI 300 index of stocks listed in Shanghai and Shenzhen rose 1.1 percent after the latest Caixin / Markit index of manufacturing purchasing managers showed that factory production remained steady in expansionist territory last month, although growth has slowed compared to November.
Hong Kong’s Hang Seng index was 0.9 percent, while Australia’s S & P / ASX 200 was 1.5 percent and South Korea’s Kospi was up 2.7 percent.
However, Japan’s Topix benchmark index lost 0.6 percent after local media reported that the government could declare a state of emergency in Tokyo and surrounding areas to contain an increase in coronavirus cases.