LONDON/TOKYO: Global shares reached record highs on Wednesday after the Dow Jones broke 30,000, with investors relieved at the prospect of a smooth handover of power after the U.S. presidential election and confident a COVID-19 vaccine would soon be ready.
President-elect Joe Biden on Tuesday introduced his foreign policy and national security team after President Donald Trump cleared the way to prepare for the start of his administration.
Reports that Biden planned to nominate former Federal Reserve Chair Janet Yellen as Treasury Secretary, potentially easing the passage of a fiscal stimulus package to counter COVID-19 damage, also cheered markets.
The renewed demand for shares pushed MSCI’s broadest gauge of world stocks to a record high of 622.12. It was last up 0.1%
European shares Euro STOXX 600 followed suit, gaining 0.1% in early trading to hold near nine-month highs, with banking stocks gaining ground, then falling back.
In Asia, Japan’s Nikkei earlier rose to a 29-year high. MSCI’s index of Asia-Pacific shares outside Japan traded down 0.2% as Chinese shares were capped by worries about rising debt defaults.
The Dow Jones Industrial Average on Tuesday crossed 30,000 for the first time on Tuesday Futures for the S&P 500 added 0.2%.
“The world is going to look a lot better this time next year than it does now, and that’s what equity markets are reflecting,” said Mike Bell, global market strategist at J.P. Morgan Asset Management. “The fact is the outlook has dramatically changed in the last month.”
EASING THE PAIN
Amid the improved outlook, investors bet that forthcoming virus vaccines would ease the pain of industries hit hardest by the pandemic, from tourism to energy.
Global energy shares have risen almost 34% so far this month, on track for their best month on record as crude prices rally.
Oil prices held near their highest levels since March on the improved global economic outlook. Brent futures were up 1.3% to $48.48 per barrel, touching a high last seen in March.
Those risk-on moves played out in bond markets, too. Yields on benchmark euro zone debt rose from record lows. German Bund yields traded near their highest levels in almost a week. Yields rise when bonds fall.
U.S. Treasuries were pressured, too, as investors bet any fiscal stimulus package in Washington would bring more debt.
Riskier currencies gained against safe havens, including the U.S. dollar. Against a basket of six currencies, the dollar was down 0.1% at 92.048 after falling 0.4% on Tuesday.
The Australian dollar moved to its highest since early September, already helped by investors unwinding bets on additional monetary easing.
The yen, a safe haven in times of political and economic stress, was little changed at 104.38 per dollar.
Still, even amid the risk-on mood, bitcoin was flat at $19,179, staying within sight of its record peak of $19,666 after November gains of nearly 40%.
