LONDON (Reuters) – World stock markets hit record highs on Monday, the first trading day of the new year, as investors hoped the vaccine launch would lift a global economy decimated by the COVID-19 pandemic.
The Chinese yuan has risen almost 1% against the dollar, while the dollar has reached its lowest levels against a basket of similar currencies since April 2018. Bitcoin has hovered above $ 32,000 due to an 800% rise since mid March.
European equities opened higher, with Britain’s FTSE 100 gaining 1.75%, Germany’s DAX rising 1.1%, Spain’s IBEX rising 1.3% and Italy’s FTSE MIB rising 0.7% %. [.EU]
The MSCI Worldwide All Countries Index, which tracks stocks from 49 countries, hit a record high and rose almost half a percent the day after the start of negotiations in London.
“The year begins with the end of 2020, a reunion of everything with the double V dichotomy (virus versus vaccine), with the hope that things get worse and stimuli increase or things get better and, well, things get better as long as there is no evidence of liquidity withdrawal and a cholera crisis, ”said a trader.
Asian stock markets also won, although Japan’s Nikkei 225 index lost initial gains, falling 0.4% after Prime Minister Yoshihide Suga confirmed that the government was considering a state of emergency for Tokyo and three prefectures neighboring as the coronavirus spreads.
Despite optimism about vaccines, investors still seem cautious about the path of the virus, which continues to spread amid the discovery of a new strain.
“The virus maintains the advantage for some time,” said Karl Steiner, chief quantitative strategist at SEB, noting that vaccinations had an irregular start, characterized by shortages of vaccines, resistance to the vaccine and delays.
Britain began vaccinating its population with the COVID-19 vaccine developed by Oxford University and AstraZeneca on Monday.
With the interval between the full launch of the vaccine and the global economic recovery, investors will rely on central banks to keep the money cheap.
“We continue to believe that stocks have more room to rise in 2021, as monetary and fiscal stimulus measures provide a wind in favor, and we anticipate significant profit growth as the global economy recovers,” said Mark Haefele , investment director at UBS Global Wealth Management.
The minutes of the Federal Reserve’s December meeting are scheduled for Wednesday and should offer more details on discussions on how to make its future policy guidance more explicit and the chance for a further increase in asset purchases this year.
The E-Mini futures for the S&P 500 remained stable after also reaching a record high.
For global stock vs. virus chart:
PAY SHEETS A RISK
The data calendar includes a series of manufacturing surveys around the world, which will show how the industry is dealing with the spread of the coronavirus, and the ISM surveys observed closely at US factories and services.
Activity at Chinese factories continued to accelerate in December, although the PMI lost 53.0 forecasts.
Japanese manufacturing stabilized for the first time in two years in December, while Taiwan recovered.
Friday sees the US December payroll report, where average forecasts are for only a modest increase of 100,000 jobs.
Analysts like Barclays point to a drop of 50,000 jobs, which would come as a shock to the market’s hopes of a quick recovery.
“A number of new activity indicators point to a slower pace with the close of the year’s economy, including data on labor markets, where initial claims increased during the December survey period,” said economist Michael Gapen on a note.
Such a drop would increase pressure on the Fed to ease even more, another burden on the dollar that is already doubling under the weight of the huge US budget and trade deficits.
In currencies, the euro retreated to $ 1.2281, having reached profit realization at the end of last week, when it reached its highest value since the beginning of 2018, at $ 1.2309. It gained almost 9% in 2020.
The dollar fell to 102.80 yen. The pound sterling settled at $ 1.3690, levels last seen in mid-2018.
The falling dollar has been a support for gold, making the metal 1.3% firmer at $ 1,931 an ounce.
Oil prices have widened their high after a few months of solid gains, with Brent surpassing $ 53 a barrel. [O/R] North American oil added 2% to $ 49.52 a barrel.
Reporting by Ritvik Carvalho; additional reporting by Carolyn Cohn in London and Wayne Cole in Sydney; Toby Chopra’s Edition