LONDON (Reuters) – Global equities rose for the 11th day in a row to reach a new high of optimism over the rollout of COVID-19 vaccines and new fiscal assistance from Washington, while tensions in the Middle East drove oil to a 13- months high.
As more people are vaccinated across key markets like the US, and with US President Joe Biden wanting to pump an additional $ 1.9 trillion in stimulus to the economy, the so-called reflection trade has been gathering steam in recent days.
On Friday, the Cboe Volatility Index, known as Wall Street’s “fear meter”, ended at its lowest level in almost a year, helping to create a 0.4% gain for MSCI’s broadest global equities target on Monday.
Based on a stronger, albeit holiday-thinned, Asian session, Europe’s largest indices were a sea of green in early deals with the UK’s FTSE 100 up 2.2%.
When the markets in China and Hong Kong were closed for the lunar New Year holiday, Japan’s Nikkei led the way, rising 1.9% to regain the 30,000-point level for the first time in more than three decades.
E-mini futures for the S&P 500 were also higher, up 0.5%, though US stock markets closed Monday for the president’s holiday.
Later in the week, all eyes will be on the release of minutes of the US Federal Reserve’s January meeting, in which politicians decided to leave rates unchanged to get tips on the likely direction of monetary policy.
Those concerned about the impact of market abundance on the inflation outlook will also have fresh data to parse, with the UK, Canada and Japan all to be reported. On Friday, major economies, including the United States, will also release the Preliminary Purchasing Managers’ Index (PMI) in February.
“We believe investors should prepare for volatility going forward, but consider them opportunities rather than threats,” said Mark Haefele, Chief Investment Officer at UBS Global Wealth Management. “We advise investors to stick to their long-term financial plans and continue to use excess cash.”
Oil joined stock markets to push higher and reached its highest level since January 2020 in hopes that US stimulus will boost the economy and fuel demand, and after a Saudi-led coalition fight in Yemen said it intercepted an explosive-laden drone fired by it Iran-oriented Houthi group.
Burnt raw rose 1.2% to $ 63.15 per barrel. Barrel. U.S. crude rose 1.2% to $ 60.21, just before previous highs.
With risk assets in favor, safe havens dipped with gold down 0.2% to $ 1,819 an ounce. Germany’s 10-year Bund yield rose 4 basis points to a high 5 1/2-month level of -0.376%, and 30-year bond yields rose 20 bps so far this month and rose to an eight-month high of 0.13% . They had traded in the negative dividend area earlier this month.
Switzerland’s 30-year government bond yields, meanwhile, rose above 0% for the first time since early 2020.
The dollar remained close to two-week downturns as traders took a more cautious view of the pace of the U.S. economy’s rebound. Against a basket of currencies, it last fell around 0.1%.
Meanwhile, Bitcoin recovered some of its weakness overnight to trade 1.8% at $ 47,801.18, below a record high of $ 49,714.66.
Additional reporting by Dhara Ranasinghe; editing by Jacqueline Wong, Alex Richardson, Larry King
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