Global Stocks on Track for Record High & with Vaccine Hopes

Global stocks look to a fresh record high on Monday. Signs of economic recovery in China and Japan, bolstered investor sentiment. Moreover, recent strong corporate earnings and hopes of a COVID-19 vaccine strengthened market sentiment.

The MSCI World Index of global shares gained 0.4% to 608.98 points. It was just shy of the record high hit briefly earlier in November. 

Overnight gains in leading markets of Asia and a stronger open for most European bourses supported the MSCI. 

Since its launching in 1987, MSCI’s broadest index of Asia-Pacific shares outside Japan hit its highest level.  Japan pulled out of recession and China posted better-than-expected industrial output data. With that, the region signed the largest ever trade deal.

EU indices increased with Britain’s FTSE 100 and the pan-Europe STOXX Europe 600. They were both up around 0.7%. 

U.S. stock futures are likely to make a similarly positive start for Wall Street trade later in the day.

The prospect of economic recovery also helped strengthen oil prices. Both Brent crude futures and West Texas Intermediate gained around 1%. 

Amid all the enthusiasm, EU government bond yields also fell back with Italian benchmark 10-year yields down 3 basis points. 

The dollar however was down slightly against a basket of currencies. Fresh data over the weekend showing an increase in the number of COVID-19 cases weighed on the dollar.

Gold steadied near a one-week high. The yellow metal was up 0.2% to $1,892 an ounce.

In the stock market, the analysts see earnings-per-share growth of between 25% and 30% across regions. Double-digit total returns through the end of 2021 that should have helped power the S&P 500. That’s to 3,900 points from its current 3,585 points.

Asia Moves On

Last week Pfizer announced it had developed a very effective vaccine. That news had investors hoping for similar good news soon from rival Moderna. 

Furthermore, Brexit trade talks are chief among European investors’ concerns on Monday. Hopes for development have helped sterling against the dollar and the euro.

The British pound edged higher against the dollar. It was changing hands at 1.3219 per dollar, and against the common currency as well. It last stood at 89.75 pence per euro.

The resignation of hardline adviser Dominic Cummings from Downing Street is seen as a positive. It will perhaps allow more British concessions. Chief negotiator David Frost however said on Twitter that talks may not succeed.

U.S. Federal Reserve Bank speakers are also up on their own talks this week. That begins with Vice Chair Richard Clarida at 1900 GMT.

U.S. bonds had sold off strongly on vaccine news last week. They were again slightly lower with the yield on benchmark U.S. 10-year debt at 0.8832%.