GLOBAL MARKETS-Dollar hits 2-1/2 year low on risk-on trades, shares buoyant

  • 12/4/2020
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* U.S. stock futures gain ahead of U.S. jobs data * FTSE hits nine-month high, sterling eyes one-year high * Ex-Japan Asia shares hit record high LONDON, Dec 4 (Reuters) - Growing prospects for a U.S. economic stimulus package and the roll-out of COVID-19 vaccines boosted demand for riskier assets on Friday, taking the safe-haven dollar to a 2-1/2-year low versus the euro and world shares towards record highs. A bipartisan, $908 billion coronavirus aid plan gained momentum in the U.S. Congress on Thursday as conservative lawmakers expressed their support. The U.S. Federal Reserve is also expected to tweak guidance on its asset-purchase scheme later this month. The European Central Bank looks certain to increase its bond buying next week. “We expect major central banks to remain very accommodative over the coming quarters as output remains below its pre-crisis level - and well below its pre-crisis trend - and inflation remains subdued,” Elia Lattuga, co-head of strategy research at Unicredit, said in a note. Britain hopes that millions of doses of the Pfizer/BioNTech COVID-19 vaccine will be delivered by the end of the year but the total will depend on how quickly it can be manufactured, business minister Alok Sharma said. Britain approved Pfizer Inc’s COVID-19 vaccine on Wednesday, jumping ahead of the rest of the world in the race to begin the mass inoculation programme. MSCI’s world share index ticked up 0.17% to within a whisker of the previous day’s record high. It is set for a fifth straight week of gains, which have seen it surge 15%. S&P500 futures rose 0.3% ahead of U.S. non-farm payrolls data at 1330 GMT, forecast to show a rise of 469,000 in November, according to a Reuters poll. The broadly upbeat mood saw the U.S. dollar lose ground to other major currencies. “One of the elements of the better news we are getting, for instance the vaccine, is to increase the attraction of risky assets and that reduces the appetite for the U.S. dollar,” said Eric Brard, head of fixed income at asset manager Amundi. The euro hit its highest since April 2018 against the dollar and was last at $1.2172, a weekly gain of more than 1.5%. The dollar was down 0.13% against a basket of currencies, near its lowest since May 2018. Britain’s FTSE 100 index reached nine-month highs and euro zone stocks were close to similar levels. German government bond yields - which move inversely to price - ticked down to -0.557%. German industrial orders rose more than expected on the month in October, data showed on Friday, raising hopes the manufacturing sector in Europe’s biggest economy started the fourth quarter on a solid footing during a second wave of the COVID-19 pandemic. Asian shares hit a record high overnight. MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.82%, surpassing its Nov. 25 high, led by gains in the tech sector. Japan’s Nikkei dipped 0.22% on profit-taking. BREXIT DEAL? The pound rose 0.2% to $1.3475, a shade below recent one-year highs, with traders hoping for a trade deal between the European Union and Britain. Michel Barnier, the EU’s chief negotiator, said it was an important day in the talks as he left his hotel in London, while his planned update for national envoys to the bloc was cancelled due to “intensive negotiations”, an EU spokesman said. A negotiated deal was “imminent” and expected before the end of the weekend, barring a last-minute breakdown in talks, an official with the bloc told Reuters. But a British minister said the talks were in a difficult phase. Emerging markets continued their gains. The Mexican peso, Brazilian real, Turkish lira, South African rand, Russian rouble and Polish zloty have all jumped 7% to 11% over the past month, adding to 5%-12% leaps in China, Taiwan and Korea’s currencies since June. Oil prices got an additional lift after OPEC and Russia agreed to reduce their deep oil output cuts from January by 500,000 barrels per day. They failed to find a compromise on a broader and longer-term policy. The increase means the Organization of the Petroleum Exporting Countries and Russia, a group known as OPEC+, would move to cut production by 7.2 million barrels per day, or 7% of global demand from January, compared with current cuts of 7.7 million barrels per day. Brent crude rose as high as $49.92 per barrel, its highest price since early March, and last stood at $49.36, up 1.3%.

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