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Stocks scale new peaks, sterling awaits last supper on Brexit

EconomyDec 09, 2020 07:25AM ET
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© Reuters. A man wearing a protective face mask walks past a stock quotation board outside a brokerage, amid the coronavirus disease (COVID-19) outbreak, in Tokyo

By Carolyn Cohn

LONDON (Reuters) - Global stocks reached record highs on Wednesday as investors hailed efforts to provide more fiscal stimulus and positive news on COVID-19 vaccines, and sterling made gains as British and European leaders meet for talks on a Brexit trade deal.

U.S. lawmakers continued to negotiate over additional stimulus to help offset the economic impact of the pandemic while pursuing a stopgap government-funding bill. Leaders in both parties remain adamant a deal must be struck but are still working through sticking points.

More good news on COVID-19 vaccines also lifted investor spirits. Britain this week became the first Western nation to begin a wide vaccination campaign, and Johnson & Johnson (NYSE:JNJ) said it could obtain late-stage trial results for a single-dose vaccine in January, earlier than expected.

Pfizer Inc (NYSE:PFE) also cleared another hurdle when the U.S. health regulator released documents flagging no new safety or efficacy concerns.

"Momentum will be a little bit less than it has been. There are certain questions to be answered about the logistics of the vaccines, and vaccines don't change the winter picture for the virus, but we are expecting positive returns for next year ... there's a lot going for the global economy," said Seema Shah, chief global strategist at Principal Global Investors.

MSCI's gauge of stocks across the globe rose to a record 635.65, up 0.23%. The index has been on a roll for weeks, gaining 15% since the beginning of last month.

U.S. futures rose 0.14%, pointing to Wall Street adding to its record high. (N)

European stocks reached their highest since February. The German DAX index gained 0.9% and Britain's FTSE 100, which has been hardest hit of the main global indexes this year, added 0.36%.

However, Britain injected a note of caution into the vaccine euphoria, saying people with a history of significant allergic reactions responded adversely to the Pfizer vaccine.

(GRAPHIC: Rebound of major world markets - https://fingfx.thomsonreuters.com/gfx/mkt/dgkplqwmlvb/Pasted%20image%201607508759118.png)

DINNER TALKS

The euro was down 0.66% against the British pound and the pound was up 0.78% versus the dollar before make-or-break talks on a trade deal between Britain and the European Union.

British Prime Minister Boris Johnson heads to Brussels on Wednesday for a meeting over dinner with European Commission President Ursula von der Leyen in a push to avoid a turbulent breakup in three weeks.

There was a glimmer of hope on Tuesday after Britain said it would drop clauses in draft domestic legislation that breach the already agreed Brexit divorce settlement, after reaching an "agreement in principle" with the EU over how to manage the Ireland-Northern Ireland border.

Britain and the EU have agreed a trusted trader scheme on the border, Ireland's state broadcaster RTE said on Wednesday.

The Canadian dollar approached the previous session's two-and-a-half-year high against the U.S. currency before a rate decision at 1500 GMT. The central bank is expected to keep rates unchanged until the end of 2022 and will not ramp up its asset- purchase programme anytime soon, according to a Reuters poll.

Euro zone bond yields - which move inversely to price - edged down before Thursday's European Central Bank meeting, where further monetary stimulus is expected. [GVD/EUR]

Portugal's 10-year bond yield, which fell this week to a record low of -0.01%, was trading at zero. (PT10YT=RR)

"That caps off a remarkable journey from the height of the sovereign debt crisis, when in early 2012 (the yield) was trading above 18% intraday," Deutsche Bank (DE:DBKGn) analysts said in a note. Spain's 10-year yields could be next to go sub-zero, they said.

The U.S. dollar dipped to 90.82 against a basket of currencies, nearing a two-and-a-half-year low hit last week in a move to riskier assets.

Highlighting the dollar's weakness, the offshore Chinese yuan strengthened past 6.5000 to reach its strongest in more than two years. The onshore yuan also traded near its highest in more than two years.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.6%, touching a record high.

Japan's Nikkei rose 1.3% to approach a 29 1/2-year high. South Korean stocks also jumped by 1.6% to trade near a record high after falling on Tuesday. Shares in China bucked the trend and fell 0.7% on profit taking.

Oil prices rallied as the positive vaccine news lifted investor hopes for a recovery in fuel demand.

Brent crude futures rose 15 cents to $48.99 a barrel. U.S. West Texas Intermediate futures gained 13 cents to $45.73. [O/R]

Spot gold fell 0.9% as the start of vaccine treatment reduced safe-haven demand for the precious metal.

Stocks scale new peaks, sterling awaits last supper on Brexit
 

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Comments (9)
Dietmar Stahl
Dietmar Stahl Dec 09, 2020 8:31AM ET
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3 things that will go away in next 10-20 years.1. Meat - will be replaced by plant based products2. Rent - there will be only buy options3. cars - there will be other means of transportation
Fahmi Yazit
Fahmi Yazit Dec 09, 2020 3:52AM ET
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Yet another hope after another. Bull- *****
Pratt Man
Pratt Man Dec 08, 2020 11:08PM ET
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gosh, I wish us in america has leadership like one England. we're still waiting for the boris johnson vaccine.
Bernard Tan
Bernard Tan Dec 08, 2020 11:08PM ET
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The vaccine is only reducing from 14 days infection period to 7 days. But you still can spread covid to others and no evidence that you will not get covid after the vaccine jab. Its all just a guesstimate vaccine! I don’t believe the vaccine can protect you or cure you. I am not taking the vaccine.
perplexed76 .
perplexed76 . Dec 08, 2020 11:08PM ET
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Bernard Tan  for how long does the vaccine protect?
Samui Lo
Samui Lo Dec 08, 2020 10:55PM ET
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at what point of a record high is a vaccine that could bring things back to quasi-normal priced in?
masterstroke oo
masterstroke oo Dec 08, 2020 10:55PM ET
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that's a good question.
Nicholas Segalle
Nicholas Segalle Dec 08, 2020 10:55PM ET
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The market is addicted to hopium. At some point we’ll have to kick this and withdrawal.
Bernard Tan
Bernard Tan Dec 08, 2020 10:55PM ET
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Vaccine or no vaccine is not the question. Whats important is whether there are financial stimulus for the economy?
James Bell
James Bell Dec 08, 2020 10:08PM ET
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no need for stimulus anymore as the vaccine will cure everything.
Joel Schwartz
Joel Schwartz Dec 08, 2020 10:08PM ET
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Vaccine isn’t bringing small businesses that failed back.
Bernard Tan
Bernard Tan Dec 08, 2020 10:08PM ET
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Baccine or no vaccine is not the question. Need to know how big and fast are the financial stimulus.
pavel zissu
pavel zissu Dec 08, 2020 10:08PM ET
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...ahhaa and Elvis is stil alive
jak mako
jak mako Dec 08, 2020 9:38PM ET
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Need new blood in this company
Ben Chan
Ben Chan Dec 08, 2020 9:05PM ET
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Everyday vaccin hope or stimilus hope! Can u think of other headings?
perplexed76 .
perplexed76 . Dec 08, 2020 9:05PM ET
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why change the truth? tradors buy everything according to these two ideas
Matthias Mol
Mati987 Dec 08, 2020 8:54PM ET
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same headline every day for 9 months straight lol
Elvis Durant
Elvis Durant Dec 08, 2020 8:54PM ET
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9 months? This fake news Reuters/Investing/FakeVirus been going in for like 10yrs now even before this fake virus kicked in
Thom Miller
Thom Miller Dec 08, 2020 8:54PM ET
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I agree. The Fake Trump Vaccine that no one wants to take should not be driving markets any longer.
rizwan aslam
rizwan aslam Dec 08, 2020 8:07PM ET
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900 billion nothing
Joel Schwartz
Joel Schwartz Dec 08, 2020 8:07PM ET
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A 1-time $600 check isn’t going to help anyone in America. Especially with how the FED threw the value of a dollar off the cliff.
 
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