Investors expect authorities to continue to make it easier for banks, businesses and individuals to borrow money and thus support their economies.
Asian stocks hit a record high on Wednesday as investors bet on a strong economic recovery next year, as there are few signs that policymakers are resuming significant stimulus efforts aimed at avoiding coronavirus-fueled downturns .
The MSCI indicator of Asia-Pacific stocks excluding Japan rose 0.6% to an all-time high, led by gains in Chinese stocks, taking its gains so far this year to 18 , 2%.
Japan’s Nikkei stock average fell 0.58% on its last trading day of 2020 after hitting a 30-year high on Tuesday. For the year, it increased by 15.8%.
“Investors are sticking to a broadly bullish view and some are starting to bet more on rising stock prices,” said Masanari Takada, multi-asset strategist at Nomura Securities.
Underpinning risky assets is the belief that global monetary authorities will continue to inject liquidity into the banking system to support the pandemic-stricken economy.
“We believe the continued support of monetary and fiscal policy means investors should take risks. Stocks will do better than bonds. Within bonds, corporate bonds should beat government bonds, ”said Hiroshi Yokotani, head of Asia-Pacific fixed income activities at State Street Global Advisors.
Futures on E-Mini for the S&P 500 edged up 0.13%, reducing much of the losses the day before after US Senate Majority Leader Mitch McConnell postponed a vote on the President Donald Trump’s call to increase COVID-19 relief checks.
At least five Republicans have so far expressed support for the higher payments, which would require 60 votes, including the support of a dozen Republicans.
The dollar remains under pressure
In the currency market, the dollar fell on the first day of trading for settlement in 2021 as traders began to shed the safe haven US currency again.
The euro rose 0.3% to $ 1.2295, after surging overnight to a high of $ 1.2275, a level last seen in April 2018.
“The start of COVID-19 vaccination campaigns in several countries as well as additional budgetary support from the United States reduce the risk of a downturn in the global economy and bode well for general sentiment in financial markets,” said Commonwealth Bank of Australia analysts said in a note.
The Australian dollar rose 0.4% to $ 0.7637, just below a two-and-a-half-year high of $ 0.7639, while the British pound rose 0.25% to 1, $ 3,500.
The Japanese yen also gained 0.15% to 103.36 per dollar.
The US dollar was listless against a basket of major currencies, losing 0.26% to settle at 89.769, within reach of a two-and-a-half-year low of 89.723.
A sluggish dollar supported gold, with bullion prices up 0.26% to $ 1,882.80 an ounce.
Oil prices extended their gains after rebounding overnight as investors hoped an increase in US pandemic aid would boost fuel demand and spur economic growth.
West Texas Intermediate U.S. crude futures rose 0.39% to $ 48.27 a barrel.
T-bills changed little after sideways trading overnight into thin trading during the year-end holidays. US two-year yields were flat at 0.127 percent and benchmark 10-year yields stood at 0.9364 percent.