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GLOBAL MARKETS-Vaccine progress and Biden win power stocks to record peak

Published 11/09/2020, 09:01 PM
Updated 11/09/2020, 09:10 PM
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(Recasts, adds details, updates prices)
* MSCI world equity index hits new record high
* Pfizer says COVID-19 vaccine is effective
* Oil up 8%, gold down, U.S. dollar near 10-week low
* Markets greet Biden win and Republican senate
* Graphic: 2020 asset performance http://tmsnrt.rs/2yaDPgn
* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh

By Danilo Masoni
MILAN, Nov 9 (Reuters) - World stocks climbed to new record
highs on Monday as a promising vaccine development from Pfizer
PFE.N and expectations global trade ties will improve under
U.S. President-elect Joe Biden boosted risk appetite.
Markets started to trade on the prospect of a Biden
presidency last week, but the Democratic candidate's projected
victory on Saturday gave more fuel to the move.
Further boosting sentiment was data showing that Pfizer's
experimental vaccine was more than 90% effective in preventing
COVID-19, potentially a big move forward in the fight against
the pandemic. The MSCI world equity index .MIWD00000PUS , which tracks
shares in 49 countries, rallied after the news broke to reach
another record high, up more than 1% on the day. On Friday, it
posted its biggest one-week gain in nearly seven months.
"The relief rally in equity seems very strong. It also seems
to have taken people off-guard," said Arne Petimezas, analyst at
AFS in Amsterdam.
The pan-European STOXX 600 .STOXX climbed almost 4% by
1203 GMT, back to February levels and driven by shares in
sectors like airlines and travel. Among other risky assets, oil
shot up nearly 8%, while safe-haven bonds and gold sold off.
E-mini futures for the S&P 500 ESc1 also got a boost,
jumping nearly 4% to a record high, although Nasdaq futures
NQc1 remained just under their all-time peak, up 1.7%.
Monday's vaccine progress reinforced expectations that the
economic damage from the pandemic would be temporary, even if
conditions could still weaken further.
"With Europe in lockdown, and lockdown risk in the U.S.,
near-term data is likely to look poor," strategists at French
bank Exane led by Dennis Jose said.
"However, if a vaccine is approved, it opens up a scenario
where consumers unleash their supersized savings, enabling
investors to look through near-term weakness."

FAVOURABLE SCENARIO
Earlier, MSCI's broadest index of Asia Pacific shares
outside Japan .MIAPJ0000PUS jumped 1.4% after hitting its
highest since January 2018 on expectations of easing trade
tensions following the U.S. election.
U.S. President Donald Trump has not conceded defeat and is
challenging the outcome of the vote but many current and past
global leaders have already congratulated Biden.

"The die is cast," said Andrea Delitala, portfolio manager
and head of euro multi-asset strategy at Pictet Asset Management
in Milan.
"The U.S. elections have returned a favourable scenario
(for) investors, freeing them from the unpredictability of the
leader of the world's leading economy ... a return of
multilateralism is on the cards," he added.
Investors expect Republicans to maintain control of the
Senate, making it harder for a Biden administration to push
through major policy changes, from a planned tax hike to a big
fiscal stimulus package.
That would mean better earnings prospects for companies
exposed to the world's largest economy but also that the U.S.
Federal Reserve might have to step in to provide any further
support the pandemic-hit economy may need.
Oil prices jumped as investors greeted the vaccine news and
the prospect of a Biden victory, shrugging off worries about
lacklustre demand. Brent LCOc1 prices added 8% to $42.6.
Spot gold XAU= fell 1.8% to $1,914.96 per ounce.
The dollar remained weak on expectations that monetary
policy in the United States will remain easy and global trade
relations improve.
After posting its biggest weekly loss in more than seven
months on Friday, the dollar index USD= was up 0.2% to just
above a 10-week low, while growth and trade proxies such as the
Australian dollar and the Chinese yuan remained in demand.
The euro EUR= , which climbed 1.9% last week, was up 0.1%.
Sterling GBP= added 0.2% as the focus turned to Brexit trade
negotiations which could come to a head with the European Union
summit on Nov. 15.

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