Written by Caroline Cohen
LONDON (Reuters) – Global stocks rose to record highs on Wednesday as the safe-haven dollar reached its lowest level in more than two and a half years on the expectation of effective vaccines for the Corona virus and more US financial incentives.
European equities and the euro also got a boost after the economic PMI data came in better than expected and the European Central Bank decided on Tuesday to allow eurozone banks to start paying dividends again if they have sufficient capital.
Later, markets will look to the US Federal Reserve to see if it is hinting at an extension of its stimulus program and believes the economy will either slip into a double-dip recession or be on the cusp of a vaccine-inspired boom.
“We’re not expecting a lot of fireworks from the Fed today – they really designed very easy monetary conditions and the tone of their messages was consistently pessimistic,” said Marija Vertimani, chief strategist at Marija Vertimane. State Street (New York Stock Exchange: Global Markets. “This is unlikely to change … at this meeting.”
The strong opening in Europe saw stocks rise 1% to their highest in nine months, with the UK jumping 1.3%.
The MSCI global stock index rose 0.4% to a record 636.64. The index has risen 15% since the start of November, driven by trillions of dollars in global stimulus and a more positive outlook.
The MSCI Asia Pacific Index of stocks outside of Japan followed the recent rally on Wall Street, ending a 0.9% rally. The region also approached record highs of 3.8% so far in December, putting it on track to achieve its best annual performance since 2017.
E-mini futures are up 0.25%, after the Dow is up 1.1% overnight, and the S&P 500 and Nasdaq are up 1.3% each. ().
Optimism about a $ 1.4 trillion US spending package increased after House Speaker Nancy Pelosi called on other congressional leaders to meet late Tuesday to reach a deal that will be triggered this week.
“The odds are that this deal is in excess of the $ 500 billion proposed by the Republicans, and it is likely to be less than the $ 900 billion proposed by the JDRC,” said Sebastian Galle, an overall strategic expert at Nordea Asset Management. “The markets have rightly welcomed him, but the size of the financial package is the issue.”
He was shot in the arm
Progress continued in rolling out vaccines after that modern (NASDAQ:) Ink International’s COVID-19 vaccine appeared on regulatory license this week.
The United States has also expanded the deployment of the newly approved vaccine it developed Pfizer (NYSE 🙂 and BioNTech SE (NASDAQ :).
Analysts are expecting guidance later in the day on when and how the Fed may alter its bond purchases.
The dollar fell to its lowest level since April 2018 against a basket of currencies. Derek Halbene, head of research at MUFG, said, “It confirms the high expectations that the Federal Reserve will deliver today the message that loose monetary policy will continue for a long time to come.”
The euro rose above $ 1.22 for the first time since April 2018 and bond yields rose in the euro zone, after data showed better-than-expected business activity in the bloc this month. [GVD/EUR]
The pound rose to a 12-day high against the dollar and a one-week high against the euro. Gains after European Commission President Ursula von der Leyen said there was progress in the Brexit trade deal, and the next few days would be crucial.
The dollar fell to its lowest level in a month and a half at 103.30 against the Japanese yen.
In Asia, stock markets are up. Australian shares rose 0.8%, and shares in South Korea rose 0.4% and rose 0.2%.
China’s CSI 300 premium is up 0.15% and Hong Kong is up 0.86%.
In commodities, gold prices rose 0.4% to $ 1,860.20 an ounce. [GOL/]
Gold has risen more than 22% so far this year amid unprecedented government stimulus globally.
It fell 3 cents to $ 50.73 a barrel and 1 cent fell to $ 47.61. It has been undermined by surprise gains in US crude stocks and persistent investor concerns about shrinking fuel demand amid tighter lockdowns in Europe to counter the coronavirus pandemic. [O/R]
