European equities are limited to 2021 with indices above the entire line, while the British pound has been hovering at its highest level since early 2018.
The European benchmark Stoxx 600 index rose 1.6 percent yesterday morning, while the London FTSE 100 rose 2.9 percent, the German Xetra Dax added 1.3 percent and the French CAC 40 1.9 percent.
The gains in Asia also helped lift MSCI’s World Price Index to another record high, surpassing the previous late-December high.
Jim Reid, a strategist at Deutsche Bank, said the recent post-Christmas optimism was “supported by the course of fresh Covid-19 relief in the US, which President Trump signed on December 27, as well as the a post-Brexit trade agreement between the UK and the EU. “All eyes are now on the deployment of vaccines,” he added, with traders hoping to return to relative normality soon.
Sterling was low at $ 1.3668 – held at levels not seen since early 2018 – following the conclusion of a Brexit trade agreement with the EU just before the end of last year.
The stock rises came despite the worsening pandemic, which led British Prime Minister Boris Johnson to put the country on alert for stricter social restrictions as infections skyrocket.
The oil price rose, with the international benchmark Brent crude oil up 1.3 percent to $ 52.47 a barrel. The gains came before a decision by Opec and Russia on the production cut for February later Monday. “Today’s price action indicates that the market is assuming that Opec + will keep the level of cuts unchanged for the coming month,” said Warren Patterson, head of commodity strategy at ING.
In the US, futures contracts indicate that Wall Street’s benchmark S&P 500 will rise by 0.6 percent at the opening clock later in the day.
Analysts will be watching a few elections in Georgia this week that will determine whether the Democrats of the Republicans control the U.S. Senate. The result could have far-reaching consequences for incoming President Joe Biden: if the Democrats win both seats, the Senate will no longer be controlled by the Republican, giving Mr Biden greater power to follow his legislative agenda.
“It could be a market event if the Democrats win both Senate seats in Georgia, which will enable Biden to pursue more of its tax and spending policies,” said Patrik Schowitz, global multi-asset strategist at JPMorgan Asset Management. . “It is quite possible that we may see a negative initial reaction from stock markets over concerns and taxes on companies.”
In the Asia-Pacific region, for the first time since June 2018, China’s currency crossed the significant threshold of 6.5 per dollar. The country-traded renminbi rose 1 percent on Monday to Rmb6.4562 per greenback, while the dollar, measured against a basket of its trading partners, fell 0.5 percent.
The renminbi has now wiped out the most losses against the dollar since President Donald Trump started a trade war between the two countries. The currency has been strengthened in part due to the economic recovery of the coronavirus pandemic in the country and hopes the incoming Biden administration could lead to reduced tensions between Beijing and Washington.
Asian stocks also climbed as traders returned from the New Year holiday. The mainland Shanghai and Shenzhen-listed CSI 300 index rose 1.1 percent after the latest Caixin / Markit Manufacturing Purchasing Managers’ Index showed that manufacturing output remained strong in the expanding area last month, although growth slowed compared to November.
Hong Kong’s Hang Seng index rose 0.9 per cent, while the Australian S & P / ASX 200 added 1.5 per cent and Kospi rose 2.7 per cent in South Korea.
However, Japan’s topix index lost 0.6 percent after local media reported that the government could declare a state of emergency in Tokyo and surrounding areas to counter an increase in coronavirus cases.