Wall St follows Europe’s rise on Brexit and US stimulus
Frankfurt: shares on the Borse hit a new high (pic: Sara Reed)
Updated 7am 29th: Wall Street closed at record highs after stock markets in Europe responded positively to the Brexit deal and relief that outgoing US president Donald Trump had finally signed off a stimulus package.
The London Stock Exchange was closed for the Boxing Day holiday, but the German market climbed 1.5% to a record high and the benchmark European stock index hit its highest point since late February.
Brexit relief was palpable as investors bought stock in thin holiday trading, boosted by news that Mr Trump had signed into law a $2.3 trillion pandemic aid and spending package, restoring unemployment benefits to millions of Americans and averting a federal government shutdown.
The rise in the German market was consistent with growing acknowledgement of the country’s role in driving the Brexit deal to a conclusion, given that it had much to lose from a No Deal departure for Britain.
Hussein Sayed, chief market strategist at FXTM, told the Reuters agency: “We can finally breathe a big sigh of relief and say that chaos over the stimulus bill is over.
“A sell-off has been averted and this could provide one last boost to risk assets in the last four trading days of the year.”
The double boost follows the recent news of multiple vaccines to combat the Covid pandemic, giving rise to greater optimism for an economic rebound in 2021.
The STOXX 600 is expected to recover nearly 43% from its March lows, though it is on course to end the year about 4% lower.
France’s CAC 40 index and Spain’s IBEX gained nearly 0.7% each in early trading.
On Wall Street, the Dow Jones Industrial Average was 0.78%, higher, the S&P 500 gained 1%, and the Nasdaq Composite added 0.97%.
Oil also rose on expectations of rising fuel demand in the US, with Brent crude futures up 36 cents to $51.22 a barrel, while the wave of optimism lifted Asian shares with Japanese stocks hitting a 29-year high.
The pound fell back against the resurgent dollar from a December peak of $1.3624 to $1.3483.
EU ambassadors gave another boost to the Brexit deal after unanimously approving the provisional application of the agreement.
The move was announced by a spokesman for the German EU Council presidency.
The ambassadors have given the deal, which covers £660 billion of trade, provisional backing so that it can be rolled out in time for 1 January with a more formal ratification process taking place in the New Year.
Fishing row rumbles on
The positive noises around the Brexit deal were not shared by some in the fishing community who feel they have been let down by the UK government.
The chairman of the National Federation of Fishermen’s Organisations, Andrew Locker, said the industry had been ‘betrayed’ by Mr Johnson after he “promised us the rights to all the fish that swim in our exclusive economic zone and we have got a fraction of that”.
The SNP weighed in with accusations of lying and betrayal by the Prime Minister, but without saying how it would have negotiated a better deal with the EU.
Mr Johnson has insisted that while he did not get the deal on fishing that he wanted he did secure a greater share of fish.
Cabinet Secretary Michael Gove today said said that by 2026 British fishing communities will have rights over two-thirds of fish compared to about half just now.