Global markets extend rally on recovery hopes

LONDON: Global stock markets and oil prices soared on Monday, boosted by mounting recovery hopes on the easing coronavirus crisis and increasing chances of a vast US stimulus, dealers said.

London equities jumped 1.7 percent and the pound rallied in midday deals, following weekend news that more than 15 million people in Britain have so far received Covid-19 vaccines.

Sterling leapt to $1.3914, which was the highest point since April 2018, while the euro sank to 87.240 pence, a level last seen last May.

In early aternoon eurozone trade, Paris stocks soared 1.3 percent and Frankfurt gained 0.4 percent, while Milan won 0.9 percent ater former European Central Bank boss Mario Draghi was named Saturday as Italy’s new prime minister.

“Today is probably going to drag a litle, what with the US holiday and an almost clear economic calendar, but that’s not taking the shine off stock markets,” OANDA analyst Craig Erlam told AFP, in reference to US Presidents Day on Monday.

“Investors (are) increasingly optimistic about the vaccine rollout, with the UK hiting another milestone over the weekend in its mission to supercharge its economic recovery ater a disastrous 12 months.”

Oil hit peaks not seen since last January, with New York crude topping $60 per barrel, boosted also by supply fears amid a severe cold snap in key producer state Texas.

Stocks have been surging for months as vaccination programmes kick into gear and fewer people come down with the virus, fuelling hopes that economically painful containment measures can begin to be lifted.

In Asia, Tokyo was the standout performer on Monday, with the Nikkei 225 breaking through 30,000 points for the first time in 31 years as data showed Japan’s economy performed beter than expected at the end of last year.

The end of Donald Trump’s Senate impeachment trial at the weekend, meanwhile, allows US lawmakers to concentrate on pushing through President Joe Biden’s vast rescue package.

There had been an expectation that the $1.9 trillion proposal could be watered down as Republicans and some Democrats pushed back against its size, but there is an increasing belief that the final figure could be closer to the president’s plan.

“Investors are beginning to revel again in the US fiscal and monetary bazookas that show no abating signs,” said Axi strategist Stephen Innes.

On the downside in Asia, Wellington stocks fell on news that two coronavirus infections that have prompted a snap lockdown of Auckland were the country’s first cases of the highly contagious strain first detected in Britain. Hong Kong, Shanghai and Taipei were closed for holidays.

Bitcoin retreated ater hiting a new record of $49,694.24 over the weekend ater Mastercard and US bank BNY Mellon announced plans last week to make it easier for people to use the cryptocurrency. It stood at about $47,900 on Monday.

Tokyo’s benchmark Nikkei index jumped nearly two percent Monday on hopes for business recovery, closing above the psychologically important 30,000 mark for the first time in more than three decades.

The Nikkei 225 index rose 1.91 percent, or 564.08 points, to 30,084.15, the highest close since 1990.

The broader Topix index advanced 1.04 percent, or 20.06 points, to 1,953.94.

“The 30,000 mark is symbolic but it’s still a waypoint,” said Toshikazu Horiuchi, a broker at Iwaicosmo Securities.

“Market sentiment has been supported by hopes for business recovery ahead of the nation’s first vaccination,” Horiuchi told AFP.

The coronavirus vaccine rollout is scheduled to start as early as Wednesday in Japan for healthcare professionals.

“Hopes for stimulus and monetary easing are also high, which helped bolster positive sentiment, but profit-taking could emerge at this level as the market is overheating,” he added.

Masayuki Kubota, chief strategist at Rakuten Securities, said: “The Nikkei index is climbing as central banks in Japan, the United States and Europe keep their massive monetary easing policies in place because of the pandemic.”

Ahead of the opening bell, the government said Japan’s economy shrank in 2020 for the first time in more than a decade as it was batered by the coronavirus but the contraction was less than expected.

“The market largely shrugged off the GDP figures, which were already factored in,” Horiuchi said.

The dollar fetched 105.02 yen in Asian aternoon trade, against 104.91 yen in New York late Friday.

Investors were paying atention to the impact of a 7.3-magnitude earthquake, which hit northeastern Japan late Saturday as news reports said more than 150 people were injured and shinkansen bullet train services were suspended.