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LONDON (Reuters) – Global stocks hit record highs on Wednesday and were on track for their best month in history, with investors applauding the prospect of a smooth transfer of power after the US presidential election and confident that COVID-19 vaccines would be ready soon.
President-elect Joe Biden introduced his foreign and national security policy team on Tuesday, after President Donald Trump paved the way for preparations for the start of his administration.
Reports that Biden planned to appoint former Federal Reserve Chairman Janet Yellen as Treasury Secretary, potentially facilitating the passage of a fiscal stimulus package to counter the damage caused by COVID-19, also have applauded the markets.
Renewed demand for shares pushed MSCI’s broadest measure of global stocks to a record high of 622.12. It was the last flat trade, on track for a record monthly gain.
The Euro STOXX 600 made early gains to nearly nine months before falling 0.3%, with autos and banks weighing in.
Futures on the S&P 500 fell ahead of the Thanksgiving holiday in the United States. Tuesday, the Dow Jones Industrial Average Tuesday Tuesday had cracked 30,000 for the first time.
“The world will be a lot better this time around next year than it is now, and that’s what the stock markets are reflecting,” said Mike Bell, global market strategist at JP Morgan Asset Management. “The point is, the outlook has changed dramatically over the past month.”
The rally in global stocks is expected to continue for at least six months, according to a Reuters poll on Wednesday.
Optimism around vaccine developments and expectations of a recovery in business confidence and profitability should also push European stocks to near record levels next year, a separate Reuters survey found.
Previously, the Japanese Nikkei hit a 29-year high, although analysts and fund managers polled by Reuters expected a correction in the near term.
The MSCI index of Asia-Pacific stocks outside Japan fell 0.4% as Chinese stocks were capped by concerns about rising defaults.
(Chart: Reuters Poll – Global Stock Market Outlook)
Ease the pain
Investors are betting that upcoming virus vaccines would help industries hardest hit by the pandemic, from tourism to energy.
Global energy stocks have risen nearly 34% so far this month, on track for their best month on record as crude prices rebound.
Oil prices have remained near their highest levels since March thanks to the improving global economic outlook. Brent futures rose 1.2% to $ 48.42 a barrel, reaching a high last recorded in March.
Risk movements have also occurred in the bond markets. Yields on benchmark eurozone debt fell from historically low levels, with German Bund yields approaching their highest levels in almost a week. Yields rise when bond prices fall.
US Treasuries have also come under pressure, with investors betting that any fiscal stimulus package in Washington would lead to more debt.
Riskier currencies gained against safe havens, although the dollar under pressure showed resilience as the morning progressed.
The Australian dollar hit its highest level since early September, already helped by investors loosening their bets on further monetary easing.
Against a basket of six currencies, the dollar turned positive, gaining 0.1% to 92.224 after falling 0.4% on Tuesday.
The dollar is still expected to fall further as progress on a vaccine and the expected choice of Yellen as the next US Treasury secretary have relieved two big uncertainties for investors.
The euro fell against the dollar and lost 0.1% for the last time to $ 1.18835.
Bitcoin edged up 0.8% to $ 191,420, staying within sight of its all-time high of $ 19,666 after posting gains of almost 40% in November alone.
(Chart: Global markets benefiting from November reign)
Reporting by Tom Wilson in London; edited by Sam Holmes, Larry King
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