SYDNEY (Reuters) – Shares began a busy week with secured gains as investors offered opportunities for a US financial and monetary stimulus, while the British pound rose in relief.
Advances in corona virus vaccines have sparked a sense of danger, with first shipments across the United States accelerating as part of a historic mission to disarm more than 100 million people by the end of March.
E-mini futures for the S&P 500 responded up 0.5%, while the March Treasury bond futures fell 5 ticks.
The broad-based MSCI index of Asia-Pacific stocks outside Japan rose 0.1% to a record high last week.
Japan’s Nikkei added 0.4%, a survey showing that sentiment improved among Japanese businesses, which were hit hardest in the December quarter.
Sterling remained firm on both the euro and the dollar as Britain and the European Union agreed to continue post-Brexit trade talks beyond Sunday’s deadline.
Against the dollar, the pound was up 0.7% at 33 1.3314 and $ 1.3222 on Friday. The euro was down 0.5% at 91.09 pence, up 92.29 from three months ago.
“Our basic case is that a ‘thin’ free trade agreement will be reached by the end of this year,” Goldman Sachs analysts wrote in a note.
“It’s a lot of uncertainty. With no progress in recent weeks, our economists are now seeing the risks of non – contractual decisions.”
This could be seen as raising the euro to 96.00 pence, while Goldman predicts that a deal could send the pound into the euro to 87.00.
The single currency is already charging heavily against the US dollar, with many analysts believing it has entered a cycle of decline as the prospect of a vaccine-driven global economic recovery reduces the need for safe havens.
The euro rose 0.2% to 1 1.2135 on Monday, its latest 31-month high of 17 1.2177. The dollar index was at 90.734 and its latest trough was close to 90.471.
An additional hurdle for the dollar will be the Federal Reserve policy meeting on December 15-16. Rather than buying more securities or “twisting” its portfolio to add to its long-term debt, the market expects the Fed to refine its policy forward direction.
“There is a risk that the central bank will make a surprise turn at this meeting, and then the Treasury mobilize and the US dollar may fall,” said Tabas Strickland, the NAB’s director of economics.
After a top Democrat pointed out that they could compromise to get an agreement past Republican objections, the prospect of a US deal on fiscal stimulation is further summed up.
All the talk of the trigger helped put a base under gold, which dropped a shadow to $ 1,836 an ounce. Gold, considered a safeguard against inflation and currency devaluation, has risen more than 21% this year.
Oil prices rallied straight for six weeks on Monday as investors set a price for next year’s global recovery.
US crude was up 11 cents at $ 46.68 a barrel, while Brent crude futures were up 12 cents at $ 50.09.
Wayne Cole Report; Editing by Richard Bullin