(Updates via US Midday Trading)
NEW YORK, Jan. 19 (Reuters) – Global equity benchmarks hit new record highs and oil prices jumped as US Treasury bonds fell on Wednesday as investors assessed the likelihood of a further US stimulus under the new Biden administration against worsening coronavirus epidemics in China and the United States.
President Joe Biden, who was sworn in on Wednesday, presented a proposed $ 1.9 trillion stimulus package last week to stimulate the economy and speed up vaccine distribution.
US Treasury Secretary candidate Janet Yellen urged lawmakers to “act big” to save the economy and worry about debt later in a confirmation hearing Tuesday.
Pandemic relief would take priority over tax increases, she said, while calling on businesses and the wealthy – both winners of Republican tax cuts in 2017 – to “pay their fair share go”.
European equity investors welcomed the comments, with the Euro STOXX 600 rising 0.7%. Luxury stocks provided the most momentum, with Richemont’s quarterly sales up 5%, pulled through the strong growth of its jewelry brands in Asia and the Middle East.
The good mood mirrored that of Asia, where the MSCI Asia-Pacific ex-Japan index rose 1% to its highest level ever. Hong Kong’s Hang Seng gained 1.1% to approach its 2019 high. Australian stocks hit a record high.
“They realized there were limits to what monetary policy can do to effect changes in the real economy,” said Shaniel Ramjee, senior investment manager at Pictet Asset Management. “The Fed will continue to buy bonds issued by the US Treasury to fund fiscal programs.”
MSCI’s worldwide stock gauge gained 1%, hitting a new record. The index is up 3.3% since early January.
At midday on Wall Street, the Dow Jones Industrial Average rose 206.91 points, or 0.67%, to 31,137.43, the S&P 500 gained 45.24 points, or 1.19%, to 3,844.15 and the Nasdaq Composite added 228.37 points, or 1.73%, to 13,425.55. .
The rise in risk assets came as the United States has officially passed 400,000 deaths from the coronavirus since the start of the pandemic. The death toll in the United States last week topped 23,000, setting a new record for the third week in a row.
China, meanwhile, said it was facing its worst virus outbreak since March 2020.
The dollar index rose 0.04%, the euro was down 0.14% to $ 1.2111.
Positioning data has shown that investors are massively short of dollars, the betting budget and current account deficits will weigh on the greenback.
The 10-year benchmarks last fell 2/32 of their price to 1.0972%, from 1.092% on Tuesday night.
Spot gold added 1.2% to $ 1,861.86 an ounce.
Italy’s benchmark borrowing costs fell to their lowest level in more than a week on Wednesday after Prime Minister Giuseppe Conte managed to stay in power – despite heading a minority government .
Italian 10-year bond yields fell to their lowest level since January 11 – before Conte lost his majority – to 0.533%, down 2 basis points on the day.
Oil prices have risen in hopes that the stimulus offered by Biden will increase economic output.
US crude rose 0.7% to $ 53.35 a barrel and Brent was at $ 56.35, up 0.81% on the day.
Reporting by David Randall; Editing by Andrea Ricci and Kirsten Donovan