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Stocks and oil ride high on Biden transition and vaccine hopes

Economy Nov 24, 2020 05:10AM ET
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2/2 © Reuters. TV camera men wait for the opening of market in front of a large screen showing stock prices at the Tokyo Stock Exchange in Tokyo 2/2

By Lawrence White and Julie Zhu

LONDON/HONG KONG (Reuters) - Stocks, oil and risk currencies gained on Tuesday as the formal go-ahead for U.S. President-elect Joe Biden to begin his transition burnished a November already boosted by COVID-19 vaccines.

European markets tracked gains in Asian and U.S. equities, with the broad-based STOXX 600 index opening 0.8% higher and Brent crude climbing to its highest level since March at $46.38 a barrel. Safe haven assets such as gold fell.

After weeks of legal challenges to the election results, U.S. General Services Administration chief Emily Murphy wrote to Biden on Monday informing him the formal hand-over process could begin.

President Donald Trump tweeted that he had told his team "do what needs to be done with regard to initial protocols", an indication he was moving toward a transition.

"Markets have been constrained by very high levels of uncertainty on the U.S. political front and around vaccines for weeks, so with those two going away investors are considering the prospect of a return to normality in 2021," said Emmanuel Cau, head of European equity strategy at Barclays (LON:BARC).

Reports that Biden plans to nominate former Federal Reserve Chair Janet Yellen to become the next Treasury Secretary further boosted U.S. stocks on expectations she would pursue more conventional policies than the outgoing Steven Mnuchin.

Futures for the S&P 500 rose 1.2% in early European trading hours and putting the 49-country MSCI world stocks index on course to set a new record high later.

Japan's Nikkei jumped 2.5% to its highest level since May 1991 overnight, with energy, real estate and financial shares leading the advance.

Asia-Pacific shares outside Japan had ticked up 0.4%. Australia's S&P/ASX 200 was 1.26% stronger, touching its highest level in almost nine months, with energy stocks leading the pack there.

Seoul's Kospi was 0.6% higher as was Hong Kong's Hang Seng which rose 0.4%. China blue-chips were an outlier however, edging down 0.6%, as investors booked profits following recent strong gains.

(Graphic: Global markets enjoying November reign https://fingfx.thomsonreuters.com/gfx/mkt/azgpozyqgvd/24-11%20assets.jpg)

Some analysts say a Biden presidency, which could mean more negotiation room for Washington and Beijing, would not make a big difference for China's equities market, as they expected little change in broad U.S. policy toward China.

The progress made on COVID-19 vaccines, which had underpinned Wall Street overnight, helped keep risk appetite elevated as it boosted optimism about a quicker revival for the global economy.

AstraZeneca (NASDAQ:AZN) and Oxford University had said on Monday that their COVID-19 vaccine, which is cheaper to make, easier to distribute and faster to scale-up than its rivals, could be as much as 90% effective.

RISK ON

The New Zealand dollar was among the currency gainers, rising as much as 0.9% to a two-year high of $0.6985 as its central bank said house prices, which have been storming higher this year, could be included in its inflation basket.

The euro was gaining towards $1.19 again and the dollar index, which tracks the greenback against a basket of six major rivals, nudged down to 92.235.

Also spurred on by the vaccine hopes, oil reached levels not seen since before the coronavirus began to spread rapidly in March and decimated demand.

Brent crude futures rose 45 cents, or 1%, to $46.51 a barrel to add to a more than 20% surge this month, while U.S. West Texas Intermediate crude added 46 cents, or 1.1%, to $43.52.

"Progress on developing and distributing a vaccine de-risks the path back to normal for oil markets," said Stephen Innes, chief global markets strategist at financial services firm Axi.

In the bond markets, the yield on the benchmark 10-year notes rose slightly to 0.87% as did those on most European government bonds. Germany's 10-year yield was up 1 basis point to -0.57% in early trade.

Gold continued to lose its shine too, falling to $1,826.3 an ounce having now dropped 10% this month.

Stocks and oil ride high on Biden transition and vaccine hopes
 

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Comments (16)
Ogün Doğan Özata
Ogün Doğan Özata Nov 24, 2020 6:18AM ET
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vaccine won't be distrubuted to enough people until summer. we are going to need full lockdowns. when that happens, watch this pumped up market on vaccine news crash with total lockdowns approaching
Kelly Mayer
Kelly Mayer Nov 24, 2020 4:44AM ET
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Soros president-elect. Welcome to totalitarianism, with a nicely defunded law and order.
Benjamin USA
Benjamin USA Nov 24, 2020 4:44AM ET
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Jeez leave old Soros out of it for once, gosh.
Kelly Mayer
Kelly Mayer Nov 24, 2020 4:44AM ET
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No.
Chris Cummins
Chris Cummins Nov 24, 2020 4:44AM ET
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Kelly Mayer  You are so funny. I bet you amuse all the little minds around you.
Jim Robertson
Jim Robertson Nov 24, 2020 1:21AM ET
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we're going to be saved by a Democrats mandate on mask wearing and curfews and closures, because science will save us, except from your lame brain ideas that produce little to no results.
Jim Robertson
Jim Robertson Nov 24, 2020 1:04AM ET
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they censored the word p o o f.
Jim Robertson
Jim Robertson Nov 24, 2020 1:03AM ET
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notice how things will be getting worse until Biden takes office, and then *******like magic everyone will be saying how much better things are now.
perplexed76 .
perplexed76 . Nov 24, 2020 1:03AM ET
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vaccine hype started before the election
Itachi Uchiha
Itachi Uchiha Nov 24, 2020 1:03AM ET
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economy is already in recession so it will be worse
Matt Rustad
Matt Rustad Nov 24, 2020 1:03AM ET
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Is that like how the coronavirus was gonna magically disappear after the election was over?
Daniel Lu
Daniel Lu Nov 24, 2020 12:52AM ET
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This is a vaccine overdose. Watch for the roller coaster ride and consequent side effect.
William Smith
William Smith Nov 24, 2020 12:46AM ET
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Wont be long before the Reuters and the rest of the fake news media will be calling them "the Biden vaccines" every day.
perplexed76 .
perplexed76 . Nov 24, 2020 12:46AM ET
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the winner takes all )
Clinton Powell
Clinton Powell Nov 24, 2020 12:23AM ET
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Whered all the looters go! Strange isnt it
perplexed76 .
perplexed76 . Nov 24, 2020 12:23AM ET
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nothing strange, Biden good for "looters". They giving him a chance.
Clinton Powell
Clinton Powell Nov 24, 2020 12:22AM ET
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Its amazing how all the pro lock down politicians should be LOCKED UP
perplexed76 .
perplexed76 . Nov 24, 2020 12:03AM ET
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pandamic christmas halloween rally!!!!
 
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