World stock markets kick off 2021 at record highs

Economy 01:46 PM - 2021-01-04

Credit: 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 hovered above $32,000 on the back of a blistering 800% rally since mid-March.

 

European stocks opened higher, with Britain’s FTSE 100 gaining 1.75%, Germany’s DAX up 1.1%, Spain’s IBEX up 1.3% and Italy’s FTSE MIB rising 0.7%. [.EU]

 

MSCI’s All-Country World Index, which tracks stocks across 49 countries, hit a record high and was up nearly half a percent on the day after the start of trading in London.

 

“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 quantiative 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 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.

 

E-Mini futures for the S&P 500 were steady after also touching a record high.

 

 

 

PUKmedia \ Reuters