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Global stocks, oil lead risk rally on U.S. stimulus hopes

EconomyDec 29, 2020 09:50AM ET
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© Reuters. A man wearing protective face mask walks in front of a stock quotation board outside a brokerage in Tokyo

By Simon Jessop

LONDON (Reuters) - Global shares rose for the fourth straight day on Tuesday and oil followed suit as hopes of fresh U.S. stimulus teed up a strong end to the year for riskier assets and had the dollar eyeing two-and-a-half-year lows.

The MSCI World Index was up 0.4% at 1203 GMT, while U.S. stock futures pointed to a similar move at the open on Wall Street, tracking broad-based gains in Europe and overnight in Asia.

Across Europe, Britain's blue-chip shares led regional markets higher on their first day of trading since the Christmas Eve agreement of a trade deal with the European Union.

The FTSE 100 rose 2.1%, on course for its fourth straight day of gains, led by companies in a range of sectors likely to benefit from the deal, including Intertek and Diageo (LON:DGE).

"Multinationals, who are the likeliest beneficiaries of frictionless, tariff-free trade, and overseas currency earners are generally leading the charge in the FTSE 100," said Russ Mould, investment director at AJ Bell.

Propping up the London market were banks and other financial services.

"This suggests that nerves remain over what deal will be struck in 2021 when it comes to financial services and indeed services overall."

Also among the gainers was drugmaker AstraZeneca (NASDAQ:AZN) buoyed by news its COVID-19 vaccine is set to be granted emergency use approval within a few days by the UK government.

The launch of the European Union's vaccination programme, hoping to end the widespread lockdowns that have stalled economies across the bloc, saw that positive sentiment shared with the continent, where beaten-down travel and leisure stocks rose 2.3%.

The global stock gains and likely higher U.S. stock market open remain underpinned by hopes a $2.3 trillion stimulus package signed into law by President Trump on Sunday will be approved by the Senate.

The package covers $1.4 trillion in spending to fund government agencies and $892 billion in COVID-19 relief, including $2,000 relief cheques to help cushion the economic impact of the pandemic.

The prospect of higher demand helped boost oil prices with Brent crude futures and U.S. West Texas Intermediate both up around 1.2%.

Demand for riskier assets weakened the U.S. dollar, which is often seen as a safe-haven asset. It was down 0.2% against a basket of currencies and eyeing the 18-month low hit in November.

Shorting the dollar has been a popular trade. Calculations by Reuters based on data released by the Commodity Futures Trading Commission on Monday suggested that trend would persist. Short positions on the dollar swelled in the week ended Dec. 21 to $26.6 billion, the highest in three months.

Among other currencies, sterling rose 0.4% against the dollar, reversing two days of losses, while the euro climbed for the third day in a row, up 0.3%, also buoyed in part by talk of an EU-China trade pact.

Yields on European government debt edged lower, with blue-chip 10-year German bond yields at 0.57% and riskier Italian, Spanish and Portuguese yields also lower.

A sluggish dollar bolstered gold prices, which rose 0.4%. [GOL/]

Global stocks, oil lead risk rally on U.S. stimulus hopes
 

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Comments (10)
Rajesh Kumar
Rajesh Kumar Dec 29, 2020 9:34AM ET
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Stimulus makes people high. Think about it, even the thought of being softly stimulated, caressed, makes me high... takes me into the clouds, into a fantasyland where everything is going good...
Rajesh Kumar
Rajesh Kumar Dec 29, 2020 9:34AM ET
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continuing with my fantasy...in a fantasyland, soft warm stimulus.. .. money lying everywhere, surrounded by honey and money .. I can fulfill all of my desires and dreamsKeep the stimulus checks coming
Lex Wild
Lex Wild Dec 29, 2020 2:59AM ET
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No we need more Stimulus to continue the Rally
Sheldon Cooper
Sheldon Cooper Dec 29, 2020 2:59AM ET
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I want my 2000$ to invest in $TSLA, then I’ll buy a Tesla with benefits
perplexed76 .
perplexed76 . Dec 29, 2020 12:51AM ET
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they think the virus will see very big bubble and run away in horror.
Taylor Duran
Taylor Duran Dec 29, 2020 12:51AM ET
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Lol!
Pete Palella
Pete Palella Dec 29, 2020 12:48AM ET
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Always riding on our backs!
king michael
king michael Dec 28, 2020 11:58PM ET
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GDP will end for the year about 8% down to $23.5 trillion and the national debt will reach $30 trillion at the mean time. EU, Japan, China ... are all reducing US treasury due to the risk. This government is working on its way to destroy dollar quickly which is the foundation of US as the top power of the world.
Sheldon Cooper
Sheldon Cooper Dec 28, 2020 11:58PM ET
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It’s time to invest in emerging, soon a usd like bolivar lol
Samui Lo
Samui Lo Dec 28, 2020 11:42PM ET
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If the economy is so good it is worth ATH markets, why would we need a stimulus in the first place?
Samui Lo
Samui Lo Dec 28, 2020 11:41PM ET
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So markets were going down on stimulus being too small, then went UP on hope of a bigger one, and now UP on the initial small one being signed 🤔... hahaha such a manipulated market
Wiley Spaller
Wiley Spaller Dec 28, 2020 11:41PM ET
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you shouldn't be in the market
Gamer Turtle
GamerTurtle Dec 28, 2020 10:57PM ET
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nothing like equity ath while world economy is operating at less than 50%
Notvery Goodathis
Peteymcletey Dec 28, 2020 9:57PM ET
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Too much "stimulus"
Hunt Richardson
Hunt Richardson Dec 28, 2020 9:39PM ET
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Nikkei ATH is a big deal. Ffull-on HODL stock market rally coming to a stock exchange near you
 
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