Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

World shares near record levels as vaccines inject hope

Published 02/04/2021, 07:20 PM
Updated 02/05/2021, 07:10 AM
© Reuters. FILE PHOTO: A man stands on an overpass with an electronic board showing Shanghai and Shenzhen stock indexes in Shanghai

© Reuters. FILE PHOTO: A man stands on an overpass with an electronic board showing Shanghai and Shenzhen stock indexes in Shanghai

By Lawrence White and Hideyuki Sano

LONDON/TOKYO (Reuters) - - Global shares approached record highs on Friday while the dollar and oil topped recent milestones, as progress in vaccine distribution and U.S. stimulus hopes prompted bets on further normalisation in the global economy.

An index of the world's major 50 markets, MSCI ACWI, rose 0.21% to 668.1, coming within reach of a record high of 670.82 touched about two weeks ago. It was the fifth consecutive day of gains.

Oil hit its highest level in a year, above $59 a barrel, supported by hopes of a quicker economic revival and supply curbs by OPEC and its allies.

The STOXX index of Europe's 600 largest stocks was up 0.3% at 410.8, though slower vaccination rollouts in continental Europe and disappointing industrial data from Germany tempered optimism.

U.S. President Joe Biden's drive to enact a $1.9 trillion coronavirus aid bill gained momentum early on Friday as the U.S. Senate narrowly approved a budget blueprint allowing Democrats to push the legislation through Congress in coming weeks, with or without Republican support.

Better-than-expected data on U.S. job markets released in the past two days fanned further hopes of a strong payroll report at 1330 GMT.

"Following from a positive U.S. trading session on Thursday supported by decent earnings numbers, it looks as though Democrats will go on their own on stimulus and not try to compromise with Republicans, so you might get something closer to the $1.9 trillion rather than a compromise," said Philip Shaw, chief economist at Investec in London.

Graphics: Recovery in earnings - https://fingfx.thomsonreuters.com/gfx/mkt/xlbvgyqgjvq/210205.png

Longer-term U.S. Treasury yields rose in anticipation of the large pandemic relief bill from Washington as well as on rising inflation expectations.

The benchmark 10-year yield stood at 1.130%, having risen to a three-week high of 1.162% the previous day. The 30-year bond yielded 1.922%, near its 10-1/2-month high of 1.951% touched on Thursday.

Bond yields rose in Europe as well, with Germany's 30-year government bond yield climbing back into positive territory for the first time since September.

Germany's DAX index was flat after data showed orders for German-made goods fell more than expected in December.

MSCI's gauge of Asian shares outside Japan rose 0.4% while Japan's Nikkei rallied 1.5%.

A market gauge of future U.S. inflation was at its highest since October 2018. A similar gauge for the euro zone hit its highest since May 2019.

While it was a strong day for conventional assets, the leading names in the recent U.S. retail-share trading fad fared worse.

The "Reddit rally" stocks GameStop (NYSE:GME) and AMC Entertainment (NYSE:AMC) plunged further after two weeks of wild swings fuelled by the WallStreetBets Reddit forum.

Deep-pocketed investors instead last week pumped a record $4.2 billion into big technology stocks, BofA's flow data showed, taking advantage of the slight pullback on Wall Street while retail traders ploughed into the Reddit favourites.

DOLLAR SMILE

The dollar headed for its best weekly gain in three months, confounding dollar bears and tracing a trading pattern known as the "Dollar Smile", which in previous years has preceded major U.S. economic rebounds and currency surges.

The U.S. dollar index stood near a two-month high, having risen 1.1% so far this week, on course for its biggest weekly increase since late October.

"It seems markets are now trying to trade on economic normalisation based on progress in vaccination," said Arihiro Nagata, general manager of global investment at Sumitomo Mitsui (NYSE:SMFG) Bank.

"The fact that the only currencies that are doing better than the dollar over the past two days are the British pound and the Israeli shekel, the two countries that are going further ahead in vaccination, seems to support that."

The British pound stood at $1.3696, not far from a two-and-a-half-year peak of $1.3759 hit late last month.

The shekel has risen over the past two days, reversing its decline since mid-January after the Bank of Israel intervened to stem its rise.

Gold edged up 0.7% to over $1,805 per ounce, but was still set for its worst weekly dip in four after hitting a two-month low of $1,785.10 on Thursday.

Oil prices extended gains on the upbeat economic mood, falling inventories and a decision by OPEC+ to stick to its output cuts.

© Reuters. FILE PHOTO: People walk through the lobby of the London Stock Exchange in London

Brent crude was up 60 cents, or 1%, to $59.44 by 1130 GMT, after hitting $59.67, its highest since Feb. 20, 2020. U.S. crude was up 57 cents, or 1%, to $56.76, after reaching $56.95, its highest since Jan. 22, 2020.

Latest comments

vaccines and other DRUGS: (Prepare for disappointment. )
get them B Gates vaccines pumping into yer blood! gogogo
Central banks inject money.
HOPES ... again LOL
When 'normalisation' happens, it will be the beginning of inflation going up.
And a major bubble bursting. Heard Pelosi has about $500k - $1 million in put options against Tesla, for 500USD a share
First ... you "heard", and a put expires (with date not even far away), we don't know when full normality will comeback. We know that the Fed won't be rising interest rates until 2023, they will let inflation running hot first. And food and energy are not even counted in the basket for CPI.
money 💰 💸 printing is going to be the Next big huge problem
Gold and Silver time then
Yes, I think that's the only asset at a very fair price when compared with all the rest
Normalised? LOL, half of small businesses are bankrupted and extremely high numbers of people out of work; but not show in unemployment rate but can be seen in the lowering of participation rate.
and to think all it took was $5 Trill
This week has been a JOKE for sure overall. oh wait "earnings....."
day of reckoning is coming for these corrupt élites and central bankers
Sickening bubble the fed has created
Flat before the tank next week..
yea
Futures are flat because the reddit crowd is sleeping right now
Or maybe futures are flat because stimulus is stalling? Or maybe becsuse lf a new strain lf the virus? Or slow vaccine rollout????
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.