Global equities appeared to end the week on a strong note, following Joe Biden’s confirmation as the next US president and expectations that his administration will provide more support in the economy.
Wall Street’s S&P 500 index rose 0.4 percent at the opening bubble in New York, despite the latest US non-farm wage data missing expectations: the country lost 140,000 jobs in December, compared to an expected increase of 71,000.
In Europe, the Stoxx 600 rose 0.6 percent by mid-afternoon, putting the region-wide benchmark on track to finish the week nearly 3 percent higher in its best performance since the vaccine-led rally in early November. The FTSE 100 in London was also on track for a weekly increase of more than 6 percent, the strongest result since mid-November.
An MSCI index tracking developed market equities rose 0.3 percent to a new high, supported by gains in Asian markets, pushing the global benchmark towards its best first week of the year since 2018.
Investors expect the Biden administration to agree to more fiscal stimulus, in addition to the $ 900 billion already agreed by lawmakers after Democratic victories in Georgia’s second election put the party in control of both houses of Congress. .
“This is probably the best news for the economy since vaccine approval,” said Adam Kurpiel, head of tariff strategy at Société Générale.
Global stocks surged this week as traders looked past the violent clashes in Washington on Wednesday when a pro-Trump crowd stormed the Capitol, interrupting Mr. Biden’s confirmation as president-elect.
“The only noise in markets. . . was a bullish rush like [they] are continuing their strong start to 2021, ”said Jim Reid, a strategist at Deutsche Bank.
Catherine Doyle, an investment specialist on Newton Investment Management’s Real Return team, said the mood in Georgia and expectations for more stimulus measures were “the dominant markets.” With no hurdles regarding the introduction of the vaccine or a new strain of the virus, “it feels like we are now really on the road to a fairly consistent and steady recovery,” she added.
Expectations that additional stimulus will also fuel inflation helped the 10-year US Treasury yield to exceed 1 percent this week for the first time since the March pandemic. The 10-year note climbed another 0.03 percentage point to 1.1 percent on Friday.
All three of the leading benchmarks on Wall Street hit record highs on Thursday, with a wide range of sectors moving forward.
Value stocks – stocks that are rated cheap based on their income or assets – have performed particularly well.
“Value plays are working really well in this first week,” said Nadège Dufossé, head of cross-asset strategy at Luxembourg-based fund manager Candriam. The environment is “more constructive for risky assets and for reflation trading,” she added.
Fast-growing tech companies have also recovered.
“Tech stocks are picking up, indicating that it will take time for the valuation gap between value and growth to converge until the economy gains traction,” said Sebastien Galy, senior macro strategist at Nordea Asset Management.
Fahad Kamal, chief investment officer at Kleinwort Hambros, warned investors should be wary of potential risks, pointing to high stock valuations, rising inflation and the “mountains of debt everywhere.”
‘Are we all missing something? Are we in the final stages of a really boisterous bull about to crash? ” he said.
Brent crude, the international oil benchmark, rose 1.7 percent to $ 55.28 a barrel. Meanwhile, gold, a port asset, fell 1.6 percent to $ 1,881 a troy ounce in hopes of a continued recovery in 2021.
In the Asia-Pacific region, Japan’s Topix closed at 1.6 percent at its all-time high since early 2018, while Hong Kong’s Hang Seng climbed 1.2 percent.