INTERNATIONAL – World exchanges hit record highs on Monday, the first day of trading in the new year, as investors hoped vaccines would ultimately fuel a global economy decimated by the Covid-19 pandemic.
The Chinese yuan rose nearly 1 percent against the dollar, while the greenback recorded its lowest level against a basket of benchmarks since April 2018. Bitcoin made a 10 percent dive and dropped below 30. $ 000 (R436819). 50) after a rapid 800 percent rally since mid-March last year.
At 1126 GMT, all European stock indices were higher with the UK FTSE 100 winning 2. 76 percent, Germany’s DAX increased by 1. 3 percent, Spain’s IBEX by 1. 36 percent and Italy’s FTSE MIBrising 1 percent. The Europe-wide STOXX 600 index was well on its way since November. 9, to 1. 6 percent.
E-Mini-Futures for the S&P 500 rose by 0. 6 percent after also reaching a record high.
MSCI’s All-Country World Index, which tracks stocks in 49 countries, hit a record high, rising 0. 6 percent a day.
« The year starts with the end of 2020, a rally with the double V dichotomy (virus vs.. . Vaccine) to see the hope that either things will get worse and stimulus will rise, or things will improve and things will improve as long as there is no evidence of a cash drain and tantrum, « said one trader.
Asian equity markets also rallied, although the Japanese Nikkei 225 index rose early and fell around zero. 4 percent after Prime Minister Yoshihide Suga confirmed 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 virus’s path as it continues to spread amid the discovery of a new strain.
« The virus will keep the upper hand for a while, » said Karl Steiner, Chief Quantitative Strategist at SEB, noting that vaccinations had an uneven start marked by vaccine shortages, vaccine resistance and delays.
The UK began vaccinating its population on Monday with the Covid-19 shot developed by Oxford University and AstraZeneca.
Given the delay between a full vaccine rollout and a global economic recovery, investors will rely on central banks to keep money cheap.
« We continue to believe stocks can continue to rise in 2021 as monetary and fiscal stimulus measures provide tailwinds, and we expect significant earnings growth as the global economy recovers, » said Mark Haefele, chief investment officer at UBS Global Asset management.
Minutes of the December meeting of the Federal Reserve are due Wednesday and should include more detailed information on discussions on how to make the guidance on forward policy more explicit and whether there is any possibility of asset purchases continuing this year increases.
The data calendar includes a number of manufacturing surveys around the world showing how the industry is dealing with the spread of the coronavirus, as well as the closely watched ISM surveys of U.S. factories and services.
Japanese manufacturing stabilized for the first time in two years in December, while Taiwan picked up again.
On Friday, the US wages and salaries report for December comes out, in which the median projections for only a modest increase of 100. 000 jobs apply.
Analysts like Barclays give a 50 drop in jobs. 000, which would be a shock to market hopes for an early recovery.
« A number of in-depth indicators of activity suggest slower momentum as the economy closes the year, including data on labor markets where initial claims rose during the survey period in December, » economist Michael Gapen said in a note.
Such a decline would increase pressure on the Fed to ease further, another drag on the dollar already easing under the weight of the massive US budget and trade deficits.
In currencies, the euro rose again to USD 1. 2294 after encountering profit taking late last week when it hit $ 1, its highest since early 2018. 2309. It increased by almost 9 percent in 2020.
The dollar’s fall has supported gold and left the metal 1. 3 percent firmer at 1. $ 931 per ounce.
Oil prices continued their spike after a few months of solid gains, with Brent topping $ 53 a barrel. US crude oil gained 1 percent 49 percent a barrel.
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World news – USA – World stocks ring in the new year with record highs
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