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LONDON / SYDNEY: Global stocks hit a new high on Monday, as signs of economic recovery in Asia, strong recent corporate earnings and hopes for a COVID-19 vaccine bolstered investor sentiment.
The MSCI World Stock Index rose 0.5 percent to 608.79 points, just shy of the all-time high briefly reached earlier in the month, helped by strong overnight gains in major Asian markets and a further open. solid for most European bags.
MSCI’s broader Asia-Pacific equity index outside of Japan reached its highest level since its launch in 1987 when Japan emerged from recession, China posted better-than-expected industrial production data and the region signed the largest trade deal of history.
Taking their lead, European indices also rose with Britain’s FTSE 100 and Europe-wide STOXX Europe 600, both rising around 0.7%.
“Markets are getting off to a strong start to the new week of operations, which is encouraging given all the excitement generated in the past seven days by the news about vaccine advancements,” said AJ Bell chief investment officer Russ Mold.
“Solid and steady earnings are possibly what investors need after a very volatile period.”
US equity futures, in turn, pointed to a positive start for Wall Street later in the day.
“With futures targeting a 300-point increase, the Dow is scheduled to start the week at 29,770, finally hitting the all-time highest intraday levels reached this time last week,” said Connor Campbell, financial analyst at Spreadex. .
The outlook for an economic recovery also helped oil prices to strengthen, with Brent and West Texas Intermediate crude futures rising about 0.8%, just below their intraday highs.
Amid all the optimism, European government bond yields also fell back and Italian 10-year benchmark yields fell 3 basis points.
However, not all assets were washed away by the rising tide, with the dollar flat against a basket of currencies, weighed down by new data over the weekend showing an increase in the number of COVID-19 cases.
Gold stabilized near a one-week high, rising 0.3 percent to $ 1,893 an ounce.
While the increase in coronavirus cases was a risk, Morgan Stanley strategists urged investors to “keep faith” in their 2021 outlook note.
“We believe this global recovery is sustainable, synchronous and policy-supported, following much of the ‘normal’ post-recession playbook. Overweight stocks and credit against cash and government bonds, and sell dollars.”
For stocks, analysts see earnings per share growth of 25-30% across all regions, with double-digit total returns through the end of 2021 that should help propel the S&P 500 to 3,900 points from his current 3,585 points.
ASIA MARCHES IN
The announcement, a week ago, that Pfizer had developed a highly effective vaccine has investors expecting similar good news soon from rival Moderna and looking beyond a harsh winter to a better spring and summer ahead.
In addition to the virus, Brexit trade talks were a top concern for European investors on Monday, with hopes for a breakthrough diminishing slightly to leave the British pound weaker against the dollar and euro.
The British pound gave up early gains to fall against the dollar, changing hands at 1.3176 per dollar, and also against the common currency, last time at 89.90 pence per euro.
While the departure of hardline adviser Dominic Cummings from Downing Street is seen as a positive thing, perhaps allowing for more British concessions, the UK’s chief Brexit negotiator David Frost said on Twitter that the talks “may not be successful” .
A host of speakers from the US Federal Reserve also participated this week, beginning with Vice President Richard Clarida at 1900 GMT.
US bonds, which had sold heavily on the vaccine news last week, were down again slightly, with the yield on US benchmark 10-year debt at 0.8799%.
(Edited by Richard Pullin, Raissa Kasolowsky, and Susan Fenton)
