Markets gain on stimulus hopes, vaccine progress
Traders work on the floor of the New York Stock Exchange. Reuters
Asian equities closed lower as surging Covid-19 infections forced global governments to impose tighter containment measures, trumping optimism over vaccines.
“The market continues to be dominated by the twin narratives of US stimulus and Brexit,” said analyst Chris Beauchamp at trading group IG.
“Despite a miserable session in Asia, where traders fretted over Europe’s return to broad lockdown policies, European markets have managed to clock up some decent gains.”
The British pound rose as Brussels and London continued to pursue extended talks for a long-awaited Brexit trade deal.
“The picture still remains unclear with respect to the future trading relationship between the UK and the EU but seeing as negotiations are still ongoing, that is good enough in traders’ eyes -- the door is open for a deal,” said CMC Markets anlayst David Madden.
London stocks fell 0.4 percent in afternoon trading with the British capital set to face tighter coronavirus restrictions from midnight.
Added to the gloom, official data showed Britain’s unemployment rate rising as the pandemic destroyed a record amount of jobs.
On the upside, Frankfurt added 0.9 percent and Paris won 0.3 percent in early afternoon eurozone deals, as US lawmakers inched towards finally agreeing a new stimulus for the world’s top economy.
Sentiment was also boosted after Joe Biden was confirmed as the next US president on Monday, with the Electoral College formalising his victory over Donald Trump, all but extinguishing the incumbent’s efforts to overturn the result of the 2020 election.
While the US on Monday began inoculations, its death toll hit 300,000 and analysts warned that while there is light at the end of the tunnel, there was still a lot of pain ahead.
Soaring case numbers have forced leaders to reimpose measures to stop the disease spreading, with New York City Mayor Bill De Blasio saying a “full shutdown” could be announced soon.
That comes as countries around the world struggle to get a grip on the crisis.
While London faces new tough restrictions as it follows swathes of Britain into the highest tier of containment, the Netherlands was preparing to enter its strictest lockdown since the pandemic began.
Turkey, France and Germany were also imposing tougher measures ahead of the Christmas holiday.
But a second coronavirus vaccine took a step towards emergency use approval in the US when a FDA briefing document recommended experts give Moderna’s jab a green light when they meet on Wednesday.
Meanwhile, the European Medicines Agency said on Tuesday it had moved forward a meeting to decide on authorisation for the Pfizer-BioNTech vaccine by more than a week to December 21.
Wall Street stocks opened higer, with the Dow adding 0.6 percent as investors expect lawmakers will finally adopt some stimulus measures.
A group of bipartisan lawmakers has split off contentious elements into separate legislation, raising hopes that a smaller $748 billion package including additional unemployment benefits and rent assistance will win support.
“Optimism is fairly high something will get done since Democrats seem willing to drop state and local aid for now,” said Edward Moya at currency trading platform Oanda.
Oil rose further above $50 a barrel on Tuesday as optimism from the roll-out of coronavirus vaccines balanced out tighter lockdowns in Europe and forecasts of a slower demand recovery.
The United States began vaccinating people on Monday as the country’s COVID-19 death toll crossed the 300,000 mark. Britain and Canada have also begun to administer shots.
Brent crude was up 14 cents, or 0.3% at $50.43 a barrel at 1435 GMT (9:35 a.m. EST). U.S. West Texas Intermediate (WTI) crude was up 26 cents at $47.25.
Oil prices have recovered in the past few weeks, with Brent reaching $51.06 on Dec. 10, its highest since March, supported by hopes of a recovery in demand. Prices had dropped to historic lows in March as the pandemic took hold.
“Brent is continuing to defy all the negative news,” said Carsten Fritsch, an analyst at Commerzbank. “More and more countries in Europe and states in the U.S. are tightening the corona restrictions over Christmas and the new year, which is likely to weigh on demand.”
