World shares positive

World shares gained on Wednesday on bets of hefty U.S. spending after U.S. Treasury Secretary nominee Janet Yellen urged lawmakers to “act big” to save the economy and worry about debt later. Oil rose and the dollar slipped in response.

At her confirmation hearing on Tuesday, Yellen said the benefits of a big stimulus package to counter the coronavirus pandemic were greater than the expenses of a higher debt burden. Pandemic relief would take priority over tax increases, she said, calling for corporations and the wealthy - both winners from Republican tax cuts in 2017 - to “pay their fair share”.

Investors in European equities welcomed the comments, with the Euro STOXX 600 climbing 0.5%, gathering steam in morning trading. Indexes in Frankfurt and Paris were up 0.5% and 0.2% respectively, though London shares were flat. Luxury stocks gave the biggest boost, with Richemont quarterly sales climbing 5%, led by strong growth at its jewellery brands in Asia and the Middle East.

The buoyant mood mirrored that in Asia, where MSCI’s Asia-Pacific index outside Japan rose 1% to its highest ever. Hong Kong’s Hang Seng gained 1.1% to near its 2019 peak. Australian shares hit a record high.

U.S. President-elect Joe Biden, who will be sworn into office on Wednesday, last week laid out a $1.9 trillion stimulus package proposal to boost the economy and speed up the distribution of vaccines.

The MSCI world equity index, which tracks shares in almost 50 countries, was last up 0.1%. On Wall Street, Nasdaq futures gained 0.8%, as Netflix jumped 12% after the close on strong growth in subscribers and projections it will no longer need to raise debt. S&P 500 futures were also up 0.4%.

Biden will take office under unprecedented security measures after the Jan. 6 assault on the Capitol.

Safe-haven gold climbed 0.6% to $1,850 per ounce. Oil prices rose on hopes that Biden’s proposed stimulus will lift economic output.