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GLOBAL MARKETS-Stocks steady as rising infections curb recovery optimism

Published 12/15/2020, 08:27 PM
Updated 12/15/2020, 08:30 PM
© Reuters.
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(Adds details, updates prices)
* World shares little changed, U.S. futures bounce back
* Rising COVID-19 infections, lockdowns dent sentiment
* Pound stabilises after Brexit deal hopes rebound
* Treasury yields steady ahead of FED policy meeting

By Danilo Masoni
MILAN, Dec 15 (Reuters) - World shares steadied on Tuesday
and currencies moved in tight ranges as rising COVID-19 cases
and social restrictions before the Christmas shopping season
offset optimism over a vaccine-driven economic recovery next
year.
The MSCI world equity index .MIWD00000PUS , which tracks
shares in 49 countries, was flat by 1201 GMT after losses in
Asia overnight. European shares .STOXX were little changed.
Investors were also watching talks between London and
Brussels on a trade deal after months of inconclusive
discussions. They were keeping an eye on a U.S. fiscal stimulus
talks, too, and on the Federal Reserve's last policy meeting of
the year, which ends on Wednesday.
The number of coronavirus deaths in the United States
exceeded 300,000 on Monday as the hardest-hit nation started its
first vaccine inoculations, while tighter COVID-19 restrictions
were imposed on London. Other countries across Europe were also set to impose new
restrictions during the holiday season to rein the contagion.
Germany adopted a stricter lockdown on Sunday.

"Much of Europe will have to weather tighter restrictions
until at least early to mid-January. Q4 will be lost quarter for
growth, but that should surprise no one," said AFS analyst Arne
Petimezas in Amsterdam.
"Markets remain bifurcated, with the solid post-vaccine
advances for equities, credit and commodities intact. Bond
yields refuse to budge though, and in particularly euro zone
government bond yields remain terribly depressed," he said.
Most Asian share markets retreated on Tuesday. MSCI's index
of Asia-Pacific shares outside Japan .MIAPJ0000PUS fell 0.4%
to its lowest in more than a week after a string of record highs
in recent weeks.
China's blue chips .CSI300 , however, ended 0.2% higher,
helped by upbeat factory data, which rose for an eighth month in
a row as an economic recovery gathered pace. Positive news on vaccines, along with a market-friendly
outcome of the U.S. presidential election that has bolstered
hopes of greater fiscal stimulus, has powered gains over the
last few weeks, lifting world shares to record highs.
A $908 billion COVID-19 relief plan in the United States
will be split into two packages in a bid to win approval, a
source said on Monday. Lawmakers hope to attach the aid to a
government funding measure that needs to be done by Friday.
On Tuesday, the MSCI world equity index was just 1.1% below
its record high and was up 11% so far this year.

"FRIENDLY BACKDROP"
Last week, the United States authorised the emergency use of
its first COVID-19 vaccine, developed by Pfizer and BioNTech.
The vaccine has already been authorised in a handful of
countries, including Britain and Canada.
The opening of a U.S. vaccine programme did not prevent Wall
Street from finishing lower on Monday.
"The start of vaccine approvals and distribution heightens
our confidence in strong global growth in 2021. Combined with
supportive policy and a fresh decline in U.S. real yields, this
remains a friendly backdrop for cyclical and risky assets," said
Goldman Sachs strategists.
"With the vaccine announcements behind us, and a sizable
market response, it makes more sense to look for areas that have
under-reflected the coming recovery," they added.
E-Mini futures for the S&P 500 ESc1 rose 0.6%, pointing to
a rebound. On Monday, the S&P 500 .SPX closed down 0.4%, the
Nasdaq .IXIC gained 0.5% and the Dow Jones reached a record
high but fell back 0.6% for the day.
In foreign exchange markets, the pound rose but remained
below Monday's peak on growing optimism about the chances of
post-Brexit trade deal. However, volatility gauges pointed to
further turbulence ahead as a Dec. 31 deadline approached.
It was last 0.4% up at $1.3379 GBP=D4 after reaching a
two-and-a-half-year high earlier this month
The dollar =USD traded near two-and-a-half-year lows as
demand for the safest assets waned and investors eyed
developments in the U.S. stimulus talks. USD/
U.S. Treasury yields US10YT=RR inched up to 0.8998% before
the Fed's two-day policy meeting. Expectations are growing
expectations the Fed will further ease monetary policy by
expanding its bond-buying programme.
"For once, there is a bit of uncertainty on the outcome,"
said Giuseppe Sersale, strategist at Anthilia in Milan. "The
pandemic's fury and some weakening in macro data are seen as
good reasons to take action. Personally I don't believe (the Fed
has) reasons to change the current stance."
The Bank of England and the Bank of Japan also close out
their 2020 meetings this week.
On bond markets, concerns about rising COVID-19 cases in
major economies put further pressure on yields.
Germany's benchmark 10-year bond yield dipped to -0.627%
DE10YT=RR , nearing recent one-month lows of around -0.64%.
Italy's and Greece's 10-year yield both fell to record lows.
Gold prices XAU= advanced 1% to $1,844.4 per ounce.
Brent crude oil prices LCOc1 were up 0.1% to $50.3 a
barrel. Gains were capped by Europe's tighter lockdowns and an
OPEC forecast for a slower recovery in demand next year.
London copper prices CMCU3 crept up, underpinned by the
strong manufacturing output data from China.

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Global assets http://tmsnrt.rs/2jvdmXl
Global currencies vs. dollar http://tmsnrt.rs/2egbfVh
MSCI All Country World Index Market Cap http://tmsnrt.rs/2EmTD6j
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