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World stocks ring in new year with record highs

Stock MarketsJan 04, 2021 06:46AM ET
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2/2 © Reuters. FILE PHOTO: Pedestrians wearing facial masks are reflected on an electric board showing stock prices outside a brokerage at a business district in Tokyo 2/2

By Ritvik Carvalho

LONDON (Reuters) -World stock markets hit record highs on Monday, the first trading day of the new year, as investors hoped the rollout of vaccines would ultimately lift a global economy decimated by the COVID-19 pandemic.

The Chinese yuan surged nearly 1% against the dollar, while the greenback plumbed its lowest levels against a basket of peer currencies since April 2018. Bitcoin took a 10% dive, falling below $30,000 after a blistering 800% rally since mid-March last year.

By 1126 GMT, European stock indexes were all higher, with Britain's FTSE 100 gaining 2.76%, Germany's DAX up 1.3%, Spain's IBEX up 1.36% and Italy's FTSE MIB rising 1%. The pan-European STOXX 600 index was on course for its best day since Nov. 9, up 1.6%. (EU)

E-Mini futures for the S&P 500 were up 0.6%, after also touching a record high. (N)

MSCI's All-Country World Index, which tracks stocks across 49 countries, hit a record high and was up 0.6% on the day.

"The year kicks off as 2020 ended, an everything rally with the double V dichotomy (virus vs. vaccine) seeing the hopes that either things get worse and stimulus ramps up or things get better and, well, things get better so long as there’s no hint of liquidity withdrawal and a taper tantrum," a trader said.

Asian stock markets also gained, although Japan's Nikkei 225 index shed early gains, falling 0.4% after Prime Minister Yoshihide Suga confirmed the government was considering a state of emergency for Tokyo and three surrounding prefectures as the coronavirus spreads.

Despite the optimism over vaccines, investors are still sounding caution over the path of the virus, which continues to spread amidst the discovery of a new strain.

"The virus retains the upper hand for a while longer," said Karl Steiner, chief quantitative strategist at SEB, noting that vaccinations have had an uneven start, characterized by vaccine shortages, vaccine resistance and delays.

Britain began vaccinating its population with the COVID-19 shot developed by Oxford University and AstraZeneca (NASDAQ:AZN) on Monday.

With the lag between a full vaccine rollout and a global economic recovery, investors will count on central banks to keep money cheap.

"We continue to believe that equities have further room to rise in 2021 as monetary and fiscal stimulus measures provide a tailwind, and we anticipate significant earnings growth as the global economy recovers," said Mark Haefele, chief investment officer at UBS Global Wealth Management.

Minutes of the Federal Reserve's December meeting are due on Wednesday and should offer more detail on discussions about making their forward policy guidance more explicit and the chance of a further increase in asset buying this year.

EYES ON DATA

The data calendar includes a raft of manufacturing surveys across the globe, which will show how industry is coping with the spread of the coronavirus, and the closely watched ISM surveys of U.S. factories and services.

Chinese factory activity continued to accelerate in December, though the PMI missed forecasts.

Japanese manufacturing stabilised for the first time in two years in December, while Taiwan picked up.

Friday sees the U.S. December payroll report where median forecasts are for only a modest increase of 100,000 jobs.

Analysts as Barclays (LON:BARC) are tipping a fall of 50,000 in jobs, which would be a shock to market hopes of a speedy recovery.

"A number of incoming indicators on activity point to slower momentum as the economy closes out the year, including data on labour markets where initial claims rose during the December survey period," said economist Michael Gapen in a note.

Such a drop would add pressure on the Fed to ease further, another burden for the dollar which is already buckling under the weight of the massive U.S. budget and trade deficits.

In currencies, the euro pushed back up to $1.2294, having run into profit-taking late last week when it reached the highest since early 2018 at $1.2309. It gained almost 9% over 2020.

The dollar slipped to 102.80 yen. Sterling firmed to $1.3690, levels last seen in mid-2018.

The decline in the dollar has been a support for gold, leaving the metal 1.3% firmer at $1,931 an ounce.

Oil prices extended their rise after a couple of months of solid gains, with Brent crossing $53 a barrel. [O/R] U.S. crude added 1% to $49 a barrel.

World stocks ring in new year with record highs
 

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Comments (7)
John Casablancas
John Casablancas Jan 04, 2021 7:52AM ET
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careful getting in here. A correction is comming soon. wait until that to get in
Zack Harding
Zack Harding Jan 04, 2021 7:14AM ET
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Make money off Biden and AOC: https://www.goldmanresearch.com/202101041298/Opportunity-Research/raising-target-on-sirc.html
Zack Harding
Zack Harding Jan 04, 2021 7:14AM ET
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Capialism ALWAYS wins.
Wiley Spaller
Wiley Spaller Jan 04, 2021 6:59AM ET
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Can't wait for the China virus to be over with 🤣🤣
David David
David9 Jan 04, 2021 12:43AM ET
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This pandemic has accelerated the pace at which China's economy will be number one in about 5 years. I think we all need to start learning chinese, and get out kids ready for the future when we all have to trade big with China. China is on pace to lead the world on many fronts, from AI, 5G, 6G, Robotics, Biopharmy, science, space, etc...
Victor Franca
Victor Franca Jan 04, 2021 12:43AM ET
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If this would does not seek the correct priorities, there will be no future for out kids. Economy doesn't survive in a abused world.
Victor Franca
Victor Franca Jan 04, 2021 12:43AM ET
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If this would does not seek the correct priorities, there will be no future for out kids. Economy doesn't survive in a abused world.
Notvery Goodathis
Peteymcletey Jan 03, 2021 10:49PM ET
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Weird. Korean economy is worst it's been in decades. But stocks are highest.
주영 김
주영 김 Jan 03, 2021 10:49PM ET
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Just like USA, lots of newcomers have been joining this stock market like Robinhood effect in S.Korea, housing market is even worse, week by week price is soaring... FOMO is engulfing many
Leon Kelly
Leon Kelly Jan 03, 2021 8:23PM ET
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Boris was hinting at more lock downs too for UK... When they start giving half shots of vaccines you know their are desperate.
Felipe Daniel
Felipe Daniel Jan 03, 2021 8:18PM ET
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China lied to the whole world about the virus weaponised and moved ahead restarting their economy
Parekh Kar
Parekh Kar Jan 03, 2021 8:18PM ET
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and u have no substance to prove thatand our govt takes decision for us not the chinait's just that they were way smarter in containing the virus.never went for complete lockdown like us
Jack Reaffer
JackReaf Jan 03, 2021 8:18PM ET
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They clearly lied about their numbers for months and the MSM refused to call them out on it.
 
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