World shares climb after S&P 500 record, despite virus woes

Shares started out the week on a strong footing after the Standard & Poors 500 hit a fresh high on Friday, with robust data from Japan and China adding to optimism over economic recoveries even as coronavirus caseloads surpass earlier records.

Stock benchmarks rose Monday in Paris, London, Hong Kong, Tokyo and most other major markets.

The S&P 500 closed at a record high on Friday on hopes that a vaccine for the coronavirus will help end the shutdowns that have devastated economies.

On Monday, the future for the S&P 500 gained 0.9% and the contract for the Dow industrials added 1%, auguring further gains.

Germany's DAX climbed 0.8% to 13,175.54 and the CAC 40 in Paris jumped 1% to 5,435.55. In Britain, the FTSE 100 advanced 0.6% to 6,354.94.

Markets were lifted by the signing on Sunday of an agreement establishing the world's biggest trade bloc, a grouping of 15 countries that includes China, Japan, South Korea, 10 countries in Southeast Asia, New Zealand and Australia. The United States, the No. 1 economy, is not a part of it.

Called the Regional Comprehensive Economic Partnership, the pact mostly will bring already low tariffs lower over a 20-year period. It is expected to have a positive but incremental impact on trade in the region.

"The fact that the agreement got over the line after eight years of negotiation between a widely disparate group of nations is an achievement in itself," Jeffrey Halley of Oanda said in a commentary. "That has left the Asia-Pacific with a feeling that there is life in the world, with or without the United States."

Adding to the upbeat mood, data released Monday showed Japan, the world's third largest economy, grew at a 21% annual pace in the last quarter, the first quarter of growth in nearly a year.

Tokyo's Nikkei 225 jumped 2.1% to 25,906.93 and the Hang Seng in Hong Kong picked up 0.9% to 26,381.67. The Kospi in South Korea surged 2% to 2,543.03 and in Australia the S&P/ASX 200 advanced 1.2% to 6,484.30. The Shanghai Composite index gained 1.1% to 3,346.97.

The Japanese data, while strong, are distorted by the size of the earlier declines, noted Robert Carnell of ING Economics, adding "the economy contracted 28.8% in the second quarter of 2020 and still remains well below pre-COVID levels."

In quarterly terms, the 7.9% contraction in April-June was followed by a rebound of 5%.

"Japan had a slightly stronger than expected bounce-back in the third quarter, but not meaningfully better in the context of the massive swings we are seeing in economic activity," Carnell said.

China's factory output rose 6.9% over a year earlier in October, holding steady at September's rate, government data showed Monday. Retail sales gained 4.3% over a year ago, up 1 percentage point from the previous month.

Investment in factories and other fixed assets rose 1.8% in the first 10 months of 2020, up 1 percentage point from the first nine months.

"The national economy sustained the momentum of steady recovery," said a government statement.

Thailand's share benchmark climbed 0.9% after the government reported the country's GDP slipped 6.4% in annual terms in July-September, an improvement from a 12.1% contraction in the previous quarter. But economists said the recovery would likely be slow given strict quarantine restrictions that have quashed tourism, a vital source of jobs and revenues.

Markets have welcomed the election of Joe Biden as president and the likelihood of Republican control of the Senate, setting up a divided government that will probably mean a continuation of business-friendly policies.

The S&P 500 added 1.4% to 3,585.15 on Friday, rising above its previous closing record of 3,580.84 set in early September. It ended the week up 2.2%.

The Dow rose 1.4%, to 29,479.81 and the Nasdaq rose 1% to 11,829.29.

The Russell 2000, which is made up of smaller companies that tend to benefit the most when investors are positive on the economy, climbed 2.1% to close at 1,744.04, besting the closing high it reached in August 2018. The index jumped 6.1% for the week.

News from drug maker Pfizer last week that preliminary trial data showed its vaccine to be 90% effective against COVID-19 drove investors to sell the highflying technology stocks that have powered the markets most of the year and to snap up beaten-down sectors like banks and energy.

But the excitement over possible vaccines has been tempered by expectations that even if a vaccine is finalized soon, it will take months for it to be distributed throughout the U.S. and around the globe.

"The vaccine enthusiasm booster shot remains the dominant narrative, even with surging infections across the U.S.: now more than 1 million since the start of November," Stephen Innes of Axi said in a commentary.

In other trading, benchmark U.S. crude oil gained $1.00 to $41.13 per barrel in electronic trading on the New York Mercantile Exchange. It lost 99 cents to $40.13 on Friday. Brent crude, the international standard, picked up 92 cents to $43.70 per barrel.

The U.S. dollar slipped to 104.43 Japanese yen from 104.65 yen. The euro rose to $1.1867 from $1.1836.