Shares lifted by U.S. stimulus cheer and Brexit relief

Milan — Global shares rose and U.S. bond yields ticked higher on Monday after President Donald Trump signed a $2.3 trillion spending package and as investors continued to celebrate a last-minute trade deal clinched between Britain and the European Union.

By backing down from his earlier threat to block the bipartisan bill, Trump allowed millions of Americans to continue receiving unemployment benefits and averted a federal government shutdown.

“As the coronavirus pandemic has shown little sign of abating, the emergency aid was needed to avoid a sharp slowdown in the economy during the first quarter,” said Nobuhiko Kuramochi, market strategist at Mizuho Securities.

“It would have been unsettling if we hadn’t had it by the end of year,” he added.

S&P futures rose 0.7% in their first trade after the Christmas holiday, edging near to a record touched last week. Nasdaq futures also rose by 0.7% and were near all-time highs.

The MSCI world index, which tracks shares in 49 nations, was 0.2% higher by 1314 GMT, boosted by strong opening gains in Europe and a positive session in Asia overnight, although trading was thinned by the festive period.

The euro STOXX index rose 0.9% in the first trading session after London and Brussels signed an eleventh hour deal on Thursday evening that preserves zero tariff access to each other’s markets.

Germany’s export-oriented DAX surged to a fresh record high, reflecting relief over the Brexit deal, while the British market was closed for the Boxing Day holiday.

“We can finally move on from the Brexit drama,” said Win Thin, global head of currency strategy at Brown Brothers Harriman.

“After the last-minute deal was struck last week, the UK parliament will vote on the deal Wednesday. With (opposition party) Labour promising its support, it should pass handily,” he added.

Earlier Japan’s Nikkei advanced 0.7% and China stocks also rose, helped by strong industrial profit data. MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.1%.

The rollouts of COVID-19 vaccines were also bolstering hopes of more economic normalisation next year, with Europe launching a mass vaccination drive on Sunday.

That for now has offset alarm over a new, highly infectious variant of the virus that has been raging in England and was confirmed in many other countries, including Japan, France and Canada, over the weekend.

In foreign exchange markets, the dollar index recovered from initial weakness and was last up 0.1%% to 90.288.

The dollar however is expected to stay under pressure as investors bet on continued recovery in the global economy and a prolonged period of loose U.S. monetary policy.

The Swiss franc fell to its lowest in nearly seven months against the euro, as investors priced out risks of a hard Brexit following last week’s deal. It later cut losses and was last down 0.1% at 1.0861 euros.

The British pound remained just below the 2-1/2-year high of $1.3625 hit earlier this month in anticipation of the EU-UK trade deal. Sterling last changed hands at $1.3512, down 0.1%, while the euro was also down 0.1% at $1.2212.

In bond markets, 10-year U.S. Treasuries yields rose to 0.9514% as the boost to risk appetite hurt safe-haven government bonds, but they remained within the recent trading range. German Bund yields were stable around -0.55%.

Precious metals were livelier as gold rose as much as 1.3% to a one week high as investors welcomed Trump’s signing of the pandemic aid bill. Initial weakness in the dollar also lent support.

Gold was last up 0.1% at $1,877.7 per ounce and silver gained about 1.8%. [GOL/]

Oil prices rose, with Brent crude futures up 1% at $51.79 per barrel and U.S. crude futures up 1.1%.

Bitcoin, which hit a new record high over the weekend, was up 3.9% at $27,279, bringing the total value of the cryptocurrency in circulation to over $500 billion.