LONDON: World shares held at record highs on Friday, buoyed by growing prospects of a U.S. economic stimulus package, while desire for riskier assets kept the safe-haven dollar at a two-and-a-half-year low.
A bipartisan, $908 billion coronavirus aid plan gained momentum in the U.S. Congress on Thursday as conservative lawmakers expressed their support.
“A deal before the year-end looked almost impossible a while back, but now a package of around $1 trillion seems within reach,” said Norihiro Fujito, chief investment strategist at Mitsubishi UFJ Morgan Stanley Securities.
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.
MSCI’s world share index ticked up 0.1% towards the previous day’s record high. It is set for a fifth straight week of gains, which have seen it surge 15%.
Asian shares hit their own 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.
Europe then saw Britain’s FTSE 100 index reach nine-month highs and euro zone stocks at similar levels. German government bond yields – which move inversely to price – struck a three-day low of -0.557%.
The British pound changed hands at $1.3116, having hit a three-month high on Thursday with traders hoping for a trade deal between the European Union and Britain.
But as talks continued to secure the Brexit deal before a transition period expires at the end of the month, a British minister said on Friday the talks were in a difficult phase, indicating chances of a breakthrough were receding. France could veto a bad deal, a French minister said.
U.S. PAYROLLS
In New York, the S&P 500 erased earlier gains after the Wall Street Journal reported that Pfizer had cut in half the target for rolling out its COVID-19 vaccine because of problems in its supply chain.
The damage did not last long, with S&P500 futures gaining 0.19% in early Friday trade.
The focus now is on key 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 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 rose 0.12% to $1.2155, near the highest levels since April 2018 it reached the day before and a weekly gain of 1.5%. The dollar was flat against a basket of currencies.
Emerging markets were continuing 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.
In commodities, 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 $49.64, up 1.9%.
(Additional reporting by Dhara Ranasinghe in London, Hideyuki Sano in Tokyo, Jessica DiNapoli in New York and Tomo Uetake in Sydney; editing by Ana Nicolaci da Costa, Kim Coghill, Larry King)
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