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  • Date of publication: 02 February 2021
  • 75
  • Reuters.com
  • Global markets rally amid disputes over US stimulus package

    Synopsis

    Global stock markets rallied for a second day on Tuesday, fueled by rising optimism about economic stimulus and the global economic recovery, while retail investors ditched GameStop and regained interest in silver.

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Description

Positive dynamics from Asia passed to Europe: the pan-European STOXX 600 gained 0.9%.

BP shares lost 3.8% after falling to a $ 5.7 billion loss last year, the first in a decade.

The MSCI Global Equity Index, which tracks stocks in 49 countries, rose 0.4% after it posted its highest in three months on Monday.

The MSCI stocks in Asia Pacific outside Japan rose 1.5% and the benchmark China CSI300 rose 1.5%, helped by reduced concerns over a lack of liquidity and a decline in new coronavirus infections. Japanese Nikkei 225 added 1%.

E-mini futures on the S&P 500 index added 0.8%.

Markets were brisk ahead of talks on Tuesday between U.S. President Joe Biden and Republican senators on a new COVID support bill. Unveiled early Monday morning, the $ 618 billion GOP stimulus plan was about three times the size of the president's proposal. Later Monday, leading Democrats submitted a $ 1.9 trillion joint budget as a step to bypass Republicans.

“If you have the opportunity to compromise on incentives, it will be very beneficial for financial assets in the medium term, as it means you will have the opportunity to recover the economy,” said François Savary, chief investment officer at Swiss asset management company Prime. Partners.

"$ 1.9 trillion has been set as a high bar for opportunity and a way to negotiate for something smaller and more efficient."

The dollar was hovering around a seven-week high, benefiting from a sell-off in the euro the day before after coronavirus bans stifled consumer spending in Germany, as well as shorting overcrowded dollar sell positions.

The dollar index was down 0.1% to 90.91.

Against the US dollar, the euro traded at $ 1.2078, just above the early December low of $ 1.2056 hit the previous session.

The Australian dollar fell after the country's central bank said it would expand its quantitative easing program to buy additional $ 100 billion in bonds. The Australian dollar was last seen at $ 0.7627, which is little changed during the day.

The Turkish lira appreciated more than 1%, continuing its gains after the central bank pledged a long-term policy last week.

Amid optimistic global market sentiment about US fiscal stimulus, yields on major eurozone government bonds rose, while benchmark German 10-year bond yields rose by about two basis points to -0.4980%.

Institutional investors are still digesting the retail frenzy that has pushed GameStop Corp shares and other so-called memes higher than their financial fundamentals in recent sessions, but have taken cautious steps to defend their positions.

GameStop, listed in Frankfurt, fell 30% from Monday's close to € 143 in early Tuesday trading. It closed in US markets at $ 225.

Spot silver prices fell 4.8% to $ 27.59 an ounce as investors took gains after the precious metal hit a nearly eight-year high in the previous session, driven by retail investors.

Spot gold on Tuesday fell 0.6% to $ 1,847.51 an ounce.

Brent crude rose 1.1% to $ 56.95 per barrel. US crude rose 1.2% to $ 54.22 as falling inventories and rising fuel demand from a severe blizzard in the northeastern US pushed prices higher.