World shares near all-time high on vaccine hopes and Fed outlook

London — European shares were mixed on Thursday and world shares held near all-time highs after a strong Asian session in which market euphoria around Covid-19 vaccines, Joe Biden’s US presidential election win and hopes for further stimulus outweighed worsening US data.

World shares are having their best month on record this November, boosted by a slew of positive vaccine announcements and hopes that Biden’s administration will deliver more economic stimulus and political stability.

The MSCI world equity index, which tracks shares in 49 countries, hit an all-time high on Wednesday and held close to this level on Thursday, up 0.2% on the day at 8.21am GMT, as markets shrugged off the latest rise in US jobless claims.

Europe’s Stoxx 600, which is also having its best month ever, up 14.5% in November, was flat on the day, while London’s FTSE 100 was down 0.4%.

Markets also took a boost from minutes from the US Federal Reserve’s November 4-5 meeting, which showed that officials discussed how the central bank’s asset purchases could be adjusted to provide additional support to the economy.

The minutes said policymakers may give new guidance about its bond-buying “fairly soon”.

“Downward pressure on the dollar has been reinforced by the release of the latest Federal open market committee (FOMC) minutes, which signaled that the Fed is likely to strengthen its quantitative easing (QE) programme at the next FOMC meeting on December 16,” wrote MUFG strategist Lee Hardman in a note to clients.

“A strong commitment to maintain QE stimulus would provide further reassurance that the punch bowl is unlikely to be taken away as soon as next year,” he said.

The dollar slipped about 0.1% and was at 91.922 against a basket of currencies at 8.28am GMT, having touched its lowest in nearly three months in early London trading. It also lost out against the safe-haven yen, down 0.2% on the day at ¥104.3 at 8.32am GMT.

US markets are closed for Thanksgiving on Thursday. Biden urged Americans to avoid big family gatherings and to wear protective masks and maintain social-distancing as Covid-19 cases soar.

“While the release of vaccine results is promising, we do not know yet when this pandemic will be completely over and that is what investors will continue to struggle with,” analysts at the FXTM brokerage told clients. “Wednesday’s economic data showed that US jobless claims increased for a second consecutive week, suggesting more pain ahead as business restrictions and partial lockdowns continue to hurt employment.”

In Europe, a survey showed that German consumer morale fell further heading into December, as a partial lockdown in Europe’s largest economy hit households’ income and willingness to spend money.

German Chancellor Angela Merkel told parliament that lockdown measures will be in place until at least the end of December and possibly longer.

The euro was up 0.1% against the dollar, at $1.1926 at 8.31am GMT. Euro-sterling was up 0.2% at 89.225.

Markets participants are closely watching trade talks between Britain and the EU, with little more than a month until the status-quo transition period ends on December 31.

Ireland’s prime minister said on Wednesday that a “good result” is still possible, but Ursula von der Leyen, head of the European Commission, said that the bloc is ready for the possibility of a no-deal exit.

Britain’s finance minister said on Thursday that “it’s clear what the shape of the deal looks like” but that the UK should not be stretching for a deal at any cost.

Eurozone government bonds were little changed, with Germany’s benchmark bund yield at -0.571%, as investors waited for the European Central Bank’s (ECB) October meeting minutes.

Oil prices slipped, stalling a rally which saw futures hit eight-month highs on Wednesday. Gold prices picked up as investors bet that the grim US economic data would lead to further stimulus.

Reuters