European stocks rally
London (AFP) – European stock markets rallied Wednesday and London jumped by around three percent as US Democrats appeared set to control Congress.
Rising bond yields also boosted bank shares as they pointed towards potentially higher profits down the line.
Meanwhile, the cryptocurrency Bitcoin briefly hit a record of $35,841 on booming investor demand, though it later eased back to around $34,600.
Analysts at the French bank Societe Generale remarked that “if this rally reverses in the next few months, it will doubtless be known as the Bitcoin Pandemic Bubble.”
In Asia, stock markets closed lower as coronavirus fallout also dominated the direction of markets worldwide.
The dollar was mixed against other major currencies as two Democratic candidates claimed victory in key Senate election runoffs that would allow them to dominate both houses of Congress.
“A dual win should lead to… a weaker dollar as the fiscal situation would be seen as unsustainable,” commented Sebastien Galy, of Nordea Investment in reference to the elections in Georgia.
Dealers believe that a double win for the Democrats would allow US President-elect Joe Biden to push through measures such as tax hikes and market regulations.
And while it could also pave the way for additional fiscal stimulus, some fear that would lead to higher inflation and raised interest rates.
Record low borrowing costs put in place by the Federal Reserve at the start of the Covid crisis have been a crucial driver of surging equity prices from their March lows.
Meanwhile, oil prices rose slightly after soaring by almost five percent Tuesday as Saudi Arabia offered to cut output by a million barrels in February and March.
The announcement sent WTI above $50 for the first time in 11 months, while shares in European oil major such as BP and Shell shot higher in reaction.
The move soothed worries about global demand, given that new lockdowns which could last months in some countries, were likely to stunt travel again.
A surge in Covid cases globally has forced several governments to reimpose lockdowns and other strict containment measures.
Analysts said that while new restrictions, worrying infection spikes and stuttering vaccine distribution in some countries were jangling nerves on trading floors, dealers were looking ahead to the second half of the year.
“Euphoria and dreams of the efficient distribution are now replaced with the unfortunate logistical rollout reality,” remarked Axi strategist Stephen Innes.
“Markets will remain focused on the end of the tunnel, regardless of its length.”
– Key figures around 1345 GMT –
London – FTSE 100: UP 3.1 percent at 6,815.68 points
Frankfurt – DAX 30: UP 1.0 percent at 13,784.91
Paris – CAC 40: UP 0.8 percent at 5,611.50
EURO STOXX 50: UP 1.1 percent at 3,586.98
Tokyo – Nikkei 225: DOWN 0.4 percent at 27,055.94 (close)
Hong Kong – Hang Seng: UP 0.2 percent at 27,692.30 (close)
Shanghai – Composite: UP 0.6 percent at 3,550.88 (close)
New York – Dow: UP 0.6 percent at 30,391.60 (close)
Euro/dollar: UP at $1.2326 from $1.2294 at 2150 GMT
Dollar/yen: UP at 103.10 yen from 102.72 yen
Pound/dollar: DOWN at $1.3599 from $1.3622
Euro/pound: UP at 90.66 pence from 90.23 pence
West Texas Intermediate: UP 0.1 percent at $49.96 per barrel
Brent North Sea crude: UP 0.6 percent at $53.90 per barrel
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Disclaimer: Validity of the above story is for 7 Days from original date of publishing. Source: AFP.