NEW YORK: The dollar weakened and world stock markets rose on Monday on encouraging signs of progress in developing a COVID-19 vaccine, while several multi-billion dollar deals also help lift the spirit of investors after last week’s downdraft.
Gold edged higher and bond yields were stable as investors gauge how the U.S. Federal Reserve will put its new approach to monetary policy into practice and keep its dovish stance at this week’s policy meeting.
Pfizer Inc and BioNTech SE on Saturday proposed expanding their Phase 3 pivotal COVID-19 vaccine trial to about 44,000 participants, while increasing the diversity of the trial population.
Drugmaker AstraZeneca said over the weekend it has resumed British clinical trials of its COVID-19 vaccine, one of the most advanced in development, after getting the green light from safety watchdogs.
“The market reacts positively to any vaccine news,” said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York. “We’re going to see a lot more vaccines come out, and that is what really is helping the markets.”
The World Health Organization reported a record one-day increase in global coronavirus cases on Sunday, with the total rising by 307,930 in 24 hours. The biggest increases were from India, the United States and Brazil.
“There is still some caution in markets because U.S. virus numbers appear to be picking up again in some states,” said Seema Shah, chief strategist at Principal Global Investors.
“The vaccine news is positive but there is a lot of skepticism about when they become widely adopted,” Shah said.
Plans by Nvidia Corp to buy UK-based chip designer Arm from Japan’s SoftBank Group Corp for as much as $40 billion, a deal expected to reshape the global semiconductor landscape, also drove sentiment. Nvidia shares jumped 6.6%.
Oracle surged 5.4% as the cloud services company said it would team up with China’s ByteDance to keep TikTok operating in the United States, beating Microsoft Corp in a deal structured as a partnership rather than an outright sale.
MSCI’s benchmark for global equity markets rose 1.38% to 573.79, while in Europe the broad FTSEurofirst 300 index added 0.07% at 1,429.
On Wall Street, the Dow Jones Industrial Average rose 1.31%, the S&P 500 gained 1.68% and the Nasdaq Composite added 2.33%.
Overnight in Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.9% to its highest in almost a week. Japan’s Nikkei firmed 0.7% after Chief Cabinet Secretary Yoshihide Suga won a landslide victory in a ruling party leadership election, paving the way for him to succeed Prime Minister Shinzo Abe.
The Fed starts a two-day policy meeting on Tuesday, the first since unveiling a landmark shift to a more tolerant stance on inflation in August. The Bank of Japan and the Bank of England announce their respective policy decisions on Thursday.
Sterling, which has been hurt by renewed Brexit turmoil, firmed before a vote on British Prime Minister Boris Johnson’s plan to break international law by breaching parts of the Brexit divorce treaty with the European Union.
Sterling was last trading at $1.2873, up 0.63% on the day, while the dollar index fell 0.294%.
The euro was up 0.23% to $1.1872, and the Japanese yen strengthened 0.51% versus the greenback at 105.67 per dollar.
Turkey’s lira set a record low against the U.S. dollar and its dollar bonds came under pressure after Moody’s cut the country’s sovereign rating and warned of the risk of a balance of payment crisis.
Oil prices slipped amid concerns about a stalled global economic recovery and falling fuel demand as Libya signaled it would end its months-long blockade and resume output, adding yet more supply to the market.
Brent crude futures fell $0.22 to $39.61 a barrel. U.S. crude futures slid $0.11 to $37.22 a barrel.
Spot gold prices rose 0.85% to $1,958.04 an ounce.
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