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Global stocks hit record high as Biden, vaccine lift global prospects

Global stocks hit record high as Biden, vaccine lift global prospects

FILE PHOTO: A staff member of the Tokyo Stock Exchange (TSE) is seen at the empty trading space after the TSE temporarily suspended all trading due to system problems in Tokyo, Japan October 1, 2020. REUTERS/Issei Kato

TOKYO/WASHINGTON: World shares rallied to a record peak on Wednesday, following an overnight surge that saw the Dow Jones benchmark crack 30,000 for the first time as investors cheered a dramatically improved global outlook.

The formal start of U.S. president-elect Joe Biden's transition to the White House and increasing confidence a COVID-19 vaccine would be ready soon ushered in renewed appetite for global shares.

After weeks of waiting, President Donald Trump's administration on Monday cleared the way for Biden to prepare for the start of his administration, giving him access to briefings and funding.

"The main thing now is that it has become official that the Biden administration will start. 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 financial markets and the Biden administration and stocks' bull trend could continue until around his inauguration in January," he said, adding reality checks could follow, once he will be sworn in.

Reports that Biden planned to nominate former Federal Reserve Chair Janet Yellen as Treasury Secretary - a move that could shift the focus heavily toward efforts to tackle growing economic inequality - also cheered markets.

That pushed MSCI's broadest gauge of world stocks up 0.2per cent to a record level. Its index of Asia-Pacific shares outside Japan gained 0.45per cent while Japan's Nikkei rallied 1.7per cent to a 29-year high.

On Wall Street on Tuesday, the Dow Jones Industrial Average rose 1.54per cent to 30,046.24 while the S&P 500 gained 1.62per cent, to 3,635.41, also a record high. The Nasdaq Composite added 1.31per cent.

E-mini futures for the S&P 500 rose another 0.5per cent in early Wednesday trade.

"Sentiment is running very hot as we come to the end of a cracker month for risk assets, so it does make you wonder whether the market is starting to exhibit signs of euphoria, and is due for a bit of a retracement in the short-term," said IG Australia markets analyst Kyle Rodda.

"But for all the risks the pandemic poses over the next few months...market participants appear happy to look through it all, and position for a post-pandemic world."

Investors bet forthcoming virus vaccine shots could ease the pain on various industries that have been hit hardest by the pandemic, from tourism to energy, despite the ongoing severe outbreak of the virus in many parts of the world.

U.S. energy shares have risen almost 38per cent so far this month.

In the currency market, risk-sensitive currencies held an upper hand against safe-haven currencies, including the U.S. dollar.

The euro held firm at US$1.1901, near the top of its recent trading range. The British pound stood at US$1.3359, near Monday's two-month high, supported also by hopes of a Brexit deal.

Bitcoin also held firm at US$18,999, near its record peak of US$19,666 touched almost three years ago.

On the other hand, the yen, seen as a safe harbour currency, was little changed at 104.56 per dollar.

Gold has also lost lustre, having hit a four-month low of US$1,800.80 on Tuesday and last stood at US$1,806.10 per ounce.

U.S. Treasuries were also pressured by expectations that Yellen's nomination as Treasury Secretary could ease the passage of a potential fiscal stimulus package, which would mean more debt.

The 10-year U.S. yield rose to 0.885per cent, compared with Thursday's low of 0.818per cent.

Oil prices also held near highest levels since March on the improved global economic outlook.

Brent futures gained 1.2per cent to US$48.45 per barrel, a high last seen in early March.

(Editing by Sam Holmes)

Source: Reuters

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