LONDON (Reuters) – Global equities hit record highs on Thursday and the dollar fell as investors bet on major stimulus from new US President Joe Biden and unwavering support from the global central bank would cushion the economic damage of the coronavirus.
European traders increased the FTSE and DAX from 0.2% to 0.4% [.EU] and pushed the euro up again[/FRX] as the European Central Bank’s first policy meeting of the year saw no change in its support policies.
With Asian equities reaching new highs overnight and Wall Street pointing higher again, the MSCI global index covering nearly 50 countries has added 0.3% to its 76% rally since the COVID crash. last March.
Republicans in the US Congress have indicated they are willing to work with Biden on his administration’s top priority, a US $ 1.9 trillion fiscal stimulus plan. Some remain opposed to the price tag, but the final amount is expected to be worth at least 5% of the US gross domestic product.
“Biden has the benefit of the doubt when it comes to markets and has had it for some time,” said Shamik Dhar, chief economist at BNY Mellon investment management.
“The benefit of a higher stimulus is considered to outweigh any negative impact of higher corporate taxes and regulations. And I think they are right to think so. Monetary policy is also likely to remain expansionary, “he said.
Bond yields have barely moved, with debt markets now focused on the ECB meeting, as the bank kept its key “deposit” interest rate at -0.5% as widely expected after raising € 500 billion in its € 1.85 trillion ($ 606.30 billion) emergency bond purchase program in December.
Since then, many European countries, including France and Germany, have tightened restrictions on blocking the coronavirus. Vaccination programs have also spread slowly, raising doubts about the speed of economic recovery.
ECB President Christine Lagarde was due to hold a press conference at 13:30 GMT.
“We don’t expect many fireworks from the European Central Bank meeting, “ING strategists said, predicting” a fairly quiet day for the euro, “which rose 0.3% to $ 1.2145, but well within its recent range from $ 1.20 to $ 1.23.
On the currency markets, the dollar fell 0.15% against the yen to 103.37 amid expectations of a boost to Biden stimulus and after the Bank of Japan left its policies unchanged overnight.
The broader dollar index fell 0.17% to 90.254, while benchmark 10-year US Treasuries returned 1.0785%, down from US close of 1.09% on Wednesday.
Wall Street was about to open with its latest technology rally.
Netflix’s stock was up nearly 17% Wednesday after it no longer needs to borrow billions of dollars to finance its TV shows and movies.
Google’s parent Alphabet also grew 5.3% Facebook, Apple, Amazon.com and Netflix, the so-called FAANGs group added $ 262 billion, bringing their market capitalization to $ 6.15 trillion.
There were weekly jobs data to look forward to, but most of the focus was on Biden’s policies around key issues such as the response to the pandemic, the economy and trade tensions that dominated the mandate. Donald Trump for the past four years.
Around the time Biden was sworn in as president on Wednesday, China announced sanctions against outgoing Secretary of State Mike Pompeo and 27 other senior officials under former President Donald Trump.
“The imposition of these sanctions on inauguration day is apparently an attempt to play partisan divisions,” Biden’s National Security Council spokeswoman Emily Horne said in a statement to Reuters.
Mark Rosenberg, CEO of high-frequency political risk data firm GeoQuant, said that rather than easing tensions between the US and China, the key indicators his firm currently monitors are worsening further.
“There is a brief stabilization with the new administration, but then a reacceleration,” Rosenberg said, highlighting US relations with Taiwan and Hong Kong and South China Sea issues as flashpoints. “It looks particularly volatile in the second half of 2021”.
In commodity markets, oil prices fell following an unexpected surge in US crude oil inventories, although hopes for an economic recovery kept losses in check. US West Texas Intermediate crude fell 0.24% to $ 53.18 a barrel. Brent crude fell 0.16% to $ 55.99 a barrel.
Industrial metals such as copper, nickel and iron ore rose, while spot gold was slightly lower at $ 1,866 per ounce. [GOL/]
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Additional reporting by Thyagaraju Adinarayan in London, editing by Larry King and Susan Fenton