TOKYO / WASHINGTON (Reuters) – World equities hit a record high on Wednesday, following an overnight surge that saw the Dow Jones benchmark crunch 30,000 units for the first time, as investors cheered on a notably global outlook. improved.
The formal beginning of US President-elect Joe Biden’s transition to the White House and the growing confidence that a COVID-19 vaccine would be ready soon ushered in a renewed appetite for global equities.
After weeks of waiting, President Donald Trump’s administration paved the way for Biden on Monday to prepare for the start of his administration, giving him access to briefings and funding.
“The main thing now is that the start of the Biden administration has become official. And we have ample liquidity from the world’s central banks, “said Norihiro Fujito, chief investment strategist at Mitsubishi UFJ Morgan Stanley Securities.
“I expect the honeymoon between the financial markets and the Biden administration and the bullish trend in stocks to continue until its inauguration in January,” he said, adding that reality checks may follow once he lends. oath.
Reports that Biden intended to appoint former Federal Reserve Chairman Janet Yellen as Treasury Secretary – a move that could shift focus heavily on efforts to tackle growing economic inequality – also encouraged markets.
This prompted MSCI’s broader global stock indicator to rise 0.2% to a record high. Its Asia-Pacific stock index outside of Japan gained 0.45%, while the Japanese Nikkei rose 1.7% to a 29-year high.
On Wall Street on Tuesday, the Dow Jones Industrial Average rose 1.54% to 30,046.24 while the S&P 500 gained 1.62%, to 3,635.41, also a record high. The Nasdaq Composite gained 1.31%.
E-mini futures for the S&P 500 were up another 0.5% at the start of trading on Wednesday.
“Sentiment is overheating as we get to the end of a month of risk asset crackers, so you wonder if the market is starting to show signs of euphoria, and a small short-term retracement is expected,” said L ‘IG Australia market analyst Kyle Rodda.
“But despite all the risks the pandemic poses in the coming months … market participants seem happy to look into everything and position themselves for a post-pandemic world.”
Investors are betting that upcoming vaccine shots against the virus could ease the pain in various industries that have been hit hardest by the pandemic. from from tourism to energy, despite the severe virus epidemic in many parts of the world.
US energy shares have risen nearly 38% so far this month.
In the foreign exchange market, risk-sensitive currencies outweighed safe haven currencies, including the US dollar.
The euro was stuck at $ 1.1901, near the high of its recent trading range. The British pound settled at $ 1.3359, close to Monday’s two-month high, also supported by hopes of a Brexit deal.
Bitcoin also remained stable at $ 18,999, close to its record high of $ 19,666 it hit nearly three years ago.
On the other hand, the yen, seen as a safe haven currency, was barely changed at 104.56 per dollar.
Gold also lost its luster, hitting a four-month low of $ 1,800.80 on Tuesday and the latest one stood at $ 1,806.10 an ounce.
US Treasuries have also been pressured by expectations that Yellen’s appointment as Treasury Secretary could facilitate the passage of a potential fiscal stimulus package, which would mean more debt.
The 10-year US yield rose to 0.885% from Thursday’s low of 0.818%.
Oil prices also held close to their highest levels since March, thanks to the improved global economic outlook.
Brent futures gained 1.2% to $ 48.45 a barrel, a high last seen in early March.
Montage by Sam Holmes