Global stock markets have hit record highs amid growing optimism that Covid-19 vaccines and stimulus measures may fuel economic recovery from the second wave of the pandemic.
The MSCI World Index, which tracks stocks across the developed world, hit a new high of 639.33 on Thursday. The index is up 16% since the beginning of November, when several vaccine advances were first announced.
Wall Street rallied even further to once again set new records for the US stock market, with the Dow Jones Industrial Average trading above the 30,000 symbolic mark reached last month. European share prices closed at the highest levels since February, while bitcoin’s value broke the $ 23,000 (£ 16,900) barrier for the first time in a second day of strong gains for the cryptocurrency. Brent crude also hit a nine-month high of $ 51.90 a barrel.
The dollar, which is normally bought by investors in times of economic crisis, sank to the lowest levels since 2018 after the Federal Reserve, the US central bank, pledged to continue pumping money into the system at through its asset purchase stimulus program until it saw “substantial progress” toward full employment and its inflation target.
The latest rebound comes as hopes for a stronger economic recovery in 2021 are raised despite the fact that the second wave of the Covid pandemic in several countries has raised the possibility of a continued disruption in business and social life well into the new Year.
However, investors are betting on the vaccine and other economic support measures from the US government, as well as ultra-low borrowing costs, that will help boost the economy next year, with negotiators from the US Congress. Close to an agreement on a Covid-19 of $ 900 billion. aid bill.
The apparent progress in the 11-hour Brexit negotiations between the UK and the EU has also lifted the pound and pushed Britain’s FTSE 250 equity index to its highest level since late February.
The pound rallied 0.7% to trade above $ 1.36, a 31-month high.
Now that time is running out to avoid potentially serious disruptions at major ports, optimism arises as EU chief negotiator Michel Barnier warned MEPs that reaching a deal on Friday would be “difficult but possible”. The European Parliament has said it needs an agreement by the end of Sunday to hold a consent vote this year.
Dean Turner, an economist at Swiss bank UBS, said hopes of a breakthrough in the Brexit talks had pushed the pound higher, while the US dollar had been under selling pressure. “All attention remains firmly on Brexit and markets eagerly anticipate news of an imminent breakthrough on the deal,” he said.
Joshua Mahony, a senior market analyst at financial trading firm IG, said the UK is at a Brexit crossroads. “For most, 2021 is expected to be a year of recovery, and the progression on the vaccination front will ensure a return to economic normality,” he said.
“However, the path ahead seems somewhat less clear for the UK, with the potential for a no-deal Brexit ensuring a lot of uncertainty in the coming months.”
Analysts said that growing interest from institutional investors was driving the rise of bitcoin. The cryptocurrency has risen more than 20% in the last two days, doubling in value since the beginning of October.
Scott Minerd, chief investment officer at Guggenheim Partners, told Bloomberg TV on Wednesday that “rampant money printing” by the Federal Reserve was driving interest in bitcoin.
“Our fundamental work shows that bitcoin should be worth around $ 400,000,” said Minerd, whose The fund has plans to invest in a bitcoin trust.. He cited the scarcity of cryptocurrency and the relative valuation of other assets such as gold.
Bitcoin was also fueled by the US Treasury’s labeling of Switzerland and Vietnam as currency manipulators on Wednesday, according to Brad Bechtel, head of global currency trading at investment firm Jefferies. He predicted that bitcoin should continue to perform well, given “massive monetary stimulus, massive growth in the money supply, a weakened US dollar, and countries around the world crying out ‘uncle’ on their currencies.”
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