World shares push higher after new round of Wall St records

AP – World shares chugged higher yesterday after another round of record highs for major indexes on Wall Street, as hopes flared once again for a new round of aid for the United States (US) economy.

Benchmarks rose in Paris, London, Tokyo, Hong Kong and Seoul. Shanghai declined after China reported that its consumer price index slipped 0.5 per cent in November compared with a year earlier.

Economists said the country’s first slip into deflation since 2009 was no cause for alarm. The overall measure was dragged down by falling food prices due to improvements in supplies, while other prices gained as economic activity recovers from the coronavirus pandemic.

“Looking through the recent volatility in food and energy prices, the inflation data are less downbeat than meets the eye,” Capital Economics said in a commentary. It noted that core consumer price inflation, excluding volatile food and energy prices, was steady at 0.5 per cent from a year earlier. Strong demand was also driving a recovery manufactured goods’ prices, it said.

The leaders of Britain and the European Union (EU) met yesterday for a final push at a Brexit deal, as the two sides warned that the chances of a post-Brexit trade deal by a year-end deadline was slipping away. A deep political divide remains over what their relationship will look like once a transition period following Britain’s departure from the bloc ends on December 31.

Britain’s FTSE 100 gained 0.6 per cent to 6,598.16 and Germany’s DAX picked up 0.5 per cent to 13,353.28. The CAC 40 in France added 0.4 per cent to 5,583.52. Wall Street looked set for an upbeat start, with the future contract for the S&P 500 up 0.2 per cent. The future for the Dow industrials was 0.3 per cent higher.

In Asian trading, Tokyo’s Nikkei 225 index gained 1.3 per cent to 26,817.94, while the Hang Seng in Hong Kong added 0.8 per cent to 26,502.84. In South Korea, the Kospi jumped two per cent to 2,755.47. Australia’s S&P/ASX 200 advanced 0.6 per cent to 6728.50, while the Shanghai Composite index slipped 1.1 per cent, to 3,371.96.

People walk by an electronic stock board of a securities firm in Tokyo. PHOTO: AP

India’s Sensex climbed 1.2 per cent to 46,132.50. Shares were also higher in Southeast Asia.

Overnight, the S&P 500 rose 0.3 per cent to 3,702.25. The Dow Jones Industrial Average gained 0.4 per cent to 30,173.88. The tech-heavy Nasdaq added 0.5 per cent to 12,582.77, marking its fourth straight record high.

Investors were encouraged by upbeat news on coronavirus vaccines and reports that lawmakers and the White House are making progress toward fresh stimulus for the US economy. The likelihood that distribution of one or more coronavirus vaccines could begin in the US in coming weeks has kept investors in a buying mood, boosting optimism about an economic recovery next year.

As the UK became the first Western country to start a mass vaccination programme, US health regulators issued a positive initial review of a COVID-19 vaccine developed by US drugmaker Pfizer and Germany’s BioNTech. The Food and Drug Administration will meet today to determine whether to green-light the distribution of that vaccine. Wide distribution of the shot is likely months away.

The need for a vaccine has grown more urgent as coronavirus cases have surged across much of the world. The virus has claimed more than 1.5 million lives, including over 284,000 in the US, the highest toll of any country.

Governments worldwide have been tightening restrictions on businesses in an effort to stem the latest spikes in cases, stoking worries about the potential economic fallout.

That’s kept investors focussed on Washington and the prospects for another round of aid for Americans and business hit hardest by the pandemic.

Late Tuesday, Treasury Secretary Stephen Mnuchin said he had offered a USD916 billion package to House Speaker Nancy Pelosi that adds a USD600 direct payment for most Americans.

Congress has been stuck in a partisan stalemate over the size and scope of any additional aid to help cushion the financial impact to people and businesses. The economy has been showing signs of a stalled recovery as the virus surge broadens nationally, including slower job growth in the US last month.

“With the markets starting to exhibit some year-end fatigue, any stimulus holiday stocking stuffer will come at a most welcome time and ensure that well-subscribed equity markets will cross the year-end finishing line on a positive note,” Stephen Innes of Axi said in a commentary.

The yield on the 10-year Treasury rose to 0.94 per cent from 0.92 per cent late Tuesday.

In other trading, benchmark US crude oil picked up 50 cents to USD46.10 per barrel in electronic trading on the New York Mercantile Exchange. It lost 16 cents to USD45.60 per barrel on Tuesday.

Brent crude, the international standard, advanced 58 cents to USD49.42 per barrel.

The dollar rose to JPY104.23 from JPY104.19 late Tuesday. The euro rose to USD1.2131 from USD1.2103.