Shares soar to file highs on international restoration hopes By Reuters
By Tom Arnold and Andrew Galbraith
LONDON / SHANGHAI (Reuters) – Global stocks rebounded, hitting a three-decade high, while US Treasuries extended their strongest sell-off in months on Friday as investors went beyond rising coronavirus cases and political unrest in the US, to focus on hopes for economic recovery later in the year.
The European euro gained 0.7% and the Frankfurt index 0.8% after German industrial production and exports rose in November.
The US e-mini stock futures also indicated a happy open, rising 0.51%.
The positive sentiment came after Wall Street hit record highs on Thursday while bond prices fell as markets bet that a new democratically controlled U.S. government would generate high spending and credit to aid the country’s economic recovery .
Investors also waited for US payroll data due later in the day to assess the health of the job market.
“Investors are buying the end of an unpredictable Trump administration and are looking forward to something new, namely a Biden presidency and the prospect of a major spending program,” said Francois Savary, chief investment officer at Swiss asset manager Prime Partners.
“People go for cyclical names and this is what drives the market, but caution needs to be exercised as this depends on an economic recovery in the coming quarters.”
The MSCI World Equity Index, which tracks stocks in nearly 50 countries, rose 0.4%, extended its push into record territory, and should end its best week since late November.
In Asia, the South Korean Kospi led the way with a 4% increase, its best daily value in nearly seven months, while the Nikkei hit its highest level since August 1990 at 2.36%. The US dollar-denominated Nikkei stock average rose from the 1989 peak to a record high.
Bucking the trend, blue-chip Chinese stocks fell 0.3% and pulled back from their 13-year high after index providers MSCI and Russell announced three Chinese telecommunications companies after Friday’s close in response to a US – Remove investment ban from their benchmarks.
The announcements, meaning global funds have a day to adjust billions in passive investments, on Friday wiped $ 5.6 billion off the value of their Hong Kong-traded stocks.
Hong Kong surged 1.1%, despite reports that the Trump administration was considering banning US companies from investing in an expanded list of Chinese companies in the final days of his presidency.
On Thursday, the S&P 500 rose 0.69%, the S&P 500 1.48% and the plus 2.56% – with all three indices ending at record highs.
The gains follow expectations that democratic scrutiny of both US Congress houses will help President-elect Joe Biden’s party implement greater fiscal stimulus despite political unrest in Washington, DC.
U.S. government officials have begun removing President Donald Trump from office ahead of Biden’s inauguration on Jan. 20 after Trump supporters stormed the U.S. Capitol.
Rising risk appetite weighed on bonds, with the 10-year benchmark bond yield hitting new highs since March. Ten-year notes returned 1.1% on Friday, up from 1.017% on Thursday.
The dollar held on to gains, aided by rising yields. The rate rose 0.35% against a basket of currencies to reach 90.121, while the euro fell 0.45% to USD 1.2216.
“We are certain that there will be a synchronized global recovery in the second half of the year,” said ING analyst Carsten Brzeski.
“Right now there are a lot of concerns about the virus and the noise surrounding the vaccine. But we need to look a little longer.”
Cryptocurrency Bitcoin fell about 2% to $ 38,733 after surpassing $ 40,000 for the first time on Thursday due to high demand from institutional and retail investors. Market watchers have said a pullback is likely after the recent attempt.
In the commodity markets, oil traders continued to focus on Saudi Arabia’s promise to deepen production cuts.
rose 0.51% to $ 54.66 a barrel, near the 11-month high. US West Texas Intermediate (WTI) rose 0.45% to $ 51.06. Both benchmarks are on their way to weekly gains of more than 5%.
declined 1.3% to $ 1,888.46 an ounce as US dollar and Treasury yields firmed.