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Stimulus hopes boost stocks to record; bitcoin soars

Published 12/16/2020, 07:04 PM
Updated 12/17/2020, 04:40 AM
© Reuters. A man wearing a protective face mask talks on his mobile phone in front of a screen showing the Nikkei index in Tokyo

© Reuters. A man wearing a protective face mask talks on his mobile phone in front of a screen showing the Nikkei index in Tokyo

By Thyagaraju Adinarayan and Tom Westbrook

LONDON/SINGAPORE (Reuters) - World stocks scaled new peaks and oil marched higher on Thursday as investors lapped up risky assets on hopes of a U.S. fiscal stimulus and the Federal Reserve's pledge to keep pumping cash into markets.

From stocks to safe-haven gold and volatile bitcoin, financial assets were in festive mood. Bitcoin hit another all-time high after first shattering the $20,000 level on Wednesday.

U.S. congressional negotiators were "closing in on" a $900 billion COVID-19 aid bill expected to include $600-$700 stimulus checks to individuals, lawmakers said on Wednesday.

Such checks issued during Spring led to money pouring into stock markets and bitcoin from punters, helping stocks recover quickly from the COVID-19 blow. A trader in London pointed to chances of a new retail-led boost to stock markets.

The general risk-on mood sent dollar to 2-1/2-year lows against major peers, while the MSCI world stock index reached a new high of 639.64. The index has climbed 16% since the end of October. Since then, multiple COVID-19 vaccine breakthroughs have been announced.

"While we expect stocks to benefit further from positive news on vaccine rollouts and U.S. fiscal support, the same cannot be said for the US dollar," said Mark Haefele, Chief Investment Officer at UBS Global Wealth Management.

"We see further (dollar) weakness ahead."

European stocks and the euro rallied for the fourth straight session as investors built up positions in riskier assets, anticipating a sharp economic recovery in 2021 backed by wider vaccine rollouts and ultra-easy monetary policy.

The British pound hit May 2018 highs on hopes of a post-Brexit trade deal.

In Asia, MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.6% to a record high. Japan's Nikkei rose 0.2% - just shy of a 29-year peak. (T)

Wall Street stock futures were pointing to more upside, with S&P 500 futures hitting a record high after the Nasdaq's record close on Wednesday.

SANTA RALLY

Brent crude oil futures rose 1.2% to $51.71 a barrel, their highest since early March - before over-production fears and virus worries pushed oil prices off a cliff. [O/R]

"My suspicion is markets are inclined to extend this rally for two reasons," said Vishnu Varathan, head economist at Mizuho in Singapore, citing U.S. monetary policy support and vaccine rollouts.

"If new infection numbers don't go crazy...I think there is some scope for a so-called Santa rally into the end of the year," he said.

U.S. Federal Reserve Chairman Jerome Powell vowed on Wednesday to keep pouring cash in to markets until the U.S. economic recovery is secure.

Bond traders were disappointed he did not extend the Fed's purchase program deeper down the yield curve, and U.S. Treasuries sold off at longer tenors, but others took it as a signal the bank will have their back. [US/]

The Swiss National Bank kept its ultra-expansive monetary policy on hold, keeping the world's lowest interest rates and staying ready to launch currency interventions despite being labelled a currency manipulator by the United States.

The Swiss Franc was last at 0.8835.

Better-than-expected labour data in Australia pushed the Aussie as high as $0.7624, its strongest since mid-2018. [AUD/]

The Aussie is also riding high on surging prices for iron ore and a mood that has pushed currencies in Malaysia, Singapore, Thailand, Taiwan, Sweden and Norway to milestone peaks. [EMRG/FRX]

The kiwi rose to its strongest since early 2018 after New Zealand's economic growth beat expectations.

U.S. Treasuries steadied, with the yield on benchmark ten-year government bonds flat at 0.9246%.

Cryptocurrency bitcoin extended gains after breaking past $20,000 overnight. It rose 8% to $23,058. Investors are attracted by its momentum - it is up 200% this year - and its purported resistance to inflation because of its limited supply.

© Reuters. A man wearing a protective face mask talks on his mobile phone in front of a screen showing the Nikkei index in Tokyo

Gold rose 0.3% to $1,869 an ounce. [GOL/]

Latest comments

It seems the general consensus is this market is full of horse pucky. How true! I said it before the last crash and I'll say it again. The universe is a mathematical marvel. It will correct all anomalies within itself. Mankind built artificial intelligence and put it in charge of the majority of trading. It keeps getting smarter and better. That doesn't mean it's infallible. The next Covid19 is coming.
Back to basic 20000---15000 10000 5000
Hope of a small stimulus 4 months of daily gains, actual destruction of earnings bah never mind haha
total insanity...hope driven rally.
Does Jerome knows that he does not need to please Trump anymore by propping the S& P? Is Jerome aware he will not be sacked if he acts according to his wishes?
Are you aware the Fed doesnt report to the President?
Whats the point of S&P soaring when business profits sre down the past 9 months, today and 6-9 mths henceforth. So the P/E is getting higher due to high share price but lowet earning! This is not economics ! Neither is it finance. Its nonsense from Congress
Dollar value is going down, so with 1€ you buy a lot more of dollars and company stocks. Soon 1 usd = 1 bolivar and stocks x10
Every printed money is being pumped into the market. Is this the last breath before a big fall? Is the market on artificial air now?
Seems like...
billionaires are grabbing every single dollar before letting the world burn
Correct and disgusting. There will be blood eventually
Latest news, French President Macron tests positive for COVID-19
Manipulated Market
Snek
"keep pouring cash in to markets until the U.S. economic recovery is secure" markets too big to fall, that's why the U.S. economy must recover somehow by itself.
Main Strret must recover first for a real recovery by Wall Street
 wall street must fence itself around from troubled economy and recover to 40,000.
stock are up now
hi
hi
Last chance was Bitcoin. Everything comes at a price. Now we hate Bitcoin forever.
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