HONG KONG – The pound extended gains against the dollar today as traders cheered the authorisation of another Covid-19 vaccine and final ratification of the Brexit trade deal, while Asian markets were mixed as a painful year draws to a close.
While the world economy has been devastated by the coronavirus and lockdowns it has caused, markets have enjoyed a broadly healthy year thanks to governments and central banks stumping up mind-boggling amounts of money to prevent a depression.
After falling off a cliff in the first quarter, equities have seen incredible gains from their March troughs – some to record highs – as the promise of ultra-low interest rates, financial backstops, and cash injections to people and businesses reassured investors.
The election of Joe Biden as US president last month – lifting hopes for a calmer leadership – and the approval of vaccines spurred another strong rally.
And, this week saw more good news with the passage of a new US$900 billion (RM3.6 trillion) US stimulus and an agreement on a post-Brexit trade deal.
While a surge in infections and the reimposition of lockdowns in recent weeks have given traders a jolt, expectations that 2021 will see a return to some form of normality have provided much-needed reassurance and support.
“Miraculously, we have just about made it over the year-end finishing line in one piece. Even though US stocks are notching year-end record highs, I suspect everyone is more than happy to slam the door shut on a devastating 2020 and hide it in our deepest memory recesses,” said Axi strategist Stephen Innes.
Still, today marks one year since the World Health Organisation first mentioned a mysterious pneumonia in China that was later identified as Covid-19, which has now infected more than 82 million people and killed over 1.79 million.
New weapon against virus
The Oxford-AstraZeneca vaccine became the latest to be signed off by authorities yesterday, providing a crucial weapon in the battle against the disease as it can be stored, transported and handled at normal refrigerated conditions.
It is cheaper and easier to administer than the rival Pfizer-BioNTech and Moderna jabs, which require freezing storage.
There was more good news for Britain yesterday, when Parliament gave the nod to Boris Johnson’s trade deal with the European Union after years of tortuous negotiations.
Johnson called the deal “the beginning of what will be a wonderful relationship between the United Kingdom and our friends and partners in the EU”.
Britain will leave the European single market and customs union at 11pm (2300 GMT) today.
The last-ditch deal averts the prospect of a cliff-edge separation that many feared would have inflicted terrible damage on the British and EU economies.
Sterling, in response to the upbeat news, rallied yesterday and built on gains in Asian trade, sitting at levels not seen since May 2018.
Asian equities were broadly higher following another positive lead from Wall Street, where the Dow eked out a fresh record.
Shanghai rallied more than 1% after data showing factory activity stabilised this month indicated that recovery in the world’s No. 2 economy remains on track.
Hong Kong, Mumbai and Taipei were also up, though Singapore, Sydney and Wellington all fell.
Key figures around 0230 GMT
Pound/dollar: Up at US$1.3642 from US$1.3624 at 2200 GMT
Euro/pound: Down at 90.16 pence from 90.27 pence
Hong Kong-Hang Seng: Up 0.3% at 27,226.46
Shanghai-Composite: Up 1.2% at 3,456.78
Tokyo-Nikkei 225: Closed for a holiday
Euro/dollar: Up at US$1.2300 from US$1.2299
Dollar/yen: Down at ¥103.15 from ¥103.20
West Texas Intermediate: Down 0.1% at US$48.35 per barrel
Brent North Sea crude: Down 0.1% at US$51.59 per barrel
New York-Dow: Up 0.2% at 30,409.56 (close)
London-FTSE 100: Down 0.7% at 6,555.82 (close). – AFP, December 31, 2020
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