Global stock markets have hit record highs amid rising optimism that Covid-19 vaccines and stimulus measures can turbocharge economic recovery from the second wave of the pandemic. The MSCI World Index, which tracks stocks across the developed world, reached a new high of 639.33 on Thursday. The index has climbed 16% since the start of November when multiple vaccine breakthroughs were first announced. Wall Street rallied further to yet again set new records for the US stock market, with the Dow Jones Industrial Average trading above the symbolic 30,000 mark reached last month. European share prices closed at the highest levels since February while the value of bitcoin broke through $23,000 (£16,900) barrier for the first time in a second day of steep gains for the cryptocurrency. Brent crude oil also hit a nine-month high of $51.90 a barrel. The dollar – which is typically bought by investors in times of economic turmoil – sank to the lowest levels since 2018 after the Federal Reserve, the US central bank, pledged to keep pumping money into the system through its asset purchase stimulus programme until it saw “substantial further progress” towards full employment and its inflation target. The latest rally comes as hopes increase for a stronger economic recovery in 2021 despite the second wave of the Covid pandemic in several countries having raised the prospect of continued disruption to business and social life well into the new year. However, investors are betting the vaccine and further economic support measures from the US government, as well as ultra-low borrowing costs, will help to propel the economy forwards next year, with US congressional negotiators close to agreement on a $900bn Covid-19 aid bill. Apparent progress in 11th-hour Brexit negotiations between the UK and the EU has also lifted the pound, and pushed Britain’s domestically focused FTSE 250 share index to its highest level since late February. Sterling rallied by 0.7% to trade above $1.36, a 31-month high. With time running out to avoid potentially severe disruption at major ports, the optimism comes as the EU’s chief negotiator, Michel Barnier, warned MEPs that striking a deal by Friday would be “difficult but possible”. The European parliament has said it needs an agreement by end of Sunday to hold a consent vote this year. Dean Turner, an economist at the Swiss bank UBS, said hopes for a breakthrough in the Brexit talks had driven the pound higher, while the US dollar had come under selling pressure. “All attention remains firmly on Brexit with the markets anxiously anticipating the news of an imminent breakthrough in the deal,” he said. Joshua Mahony, senior market analyst at the financial trading firm IG, said the UK was at a Brexit crossroads. “For most, 2021 is expected to be a year of recovery, with the progression on the vaccination front ensuring a return to economic normality,” he said. “However, the road ahead seems somewhat less clear for the UK, with the potential for a no-deal Brexit ensuring plenty of uncertainty over the months ahead.” Analysts said increasing interest from institutional investors was fuelling bitcoin’s rise. The cryptocurrency has surged by more than 20% in the last two days, doubling in value since the start of October. Scott Minerd, the chief investment officer at Guggenheim Partners, told Bloomberg TV on Wednesday that “rampant money printing” by the Federal Reserve was driving interest in bitcoin. “Our fundamental work shows that bitcoin should be worth about $400,000,” said Minerd, whose fund has plans to invest in a bitcoin trust. He cited the cryptocurrency’s scarcity and the relative valuation of other assets such as gold. Bitcoin was also boosted by the US Treasury’s labelling of Switzerland and Vietnam as currency manipulators on Wednesday, according to Brad Bechtel, the head of global currency trading at the investment firm Jefferies. He predicted that bitcoin should continue to perform well, given “massive monetary stimulus, massive growth in money supply, a weakening US dollar and countries around the world crying ‘uncle’ on their currencies”.