Stocks cautiously welcome US stimulus, wary of Brexit By Reuters


© Reuters. FILE PHOTO: Investor places his hands on the back of his head in front of an electronic board showing stock information at a brokerage house in Hefei

By Wayne Cole

SYDNEY (Reuters) – Asian stocks traded sideways in Asia on Monday, with investors cautiously welcoming news of a deal on a long-awaited US stimulus bill, although ‘difficult’ Brexit negotiations have ended. extended without agreement in sight.

The British pound slipped 0.8% to $ 1.3408 after several European countries closed their borders with the UK as the country entered a tighter lockdown to fight a new strain of coronavirus.

Prime Minister Boris Johnson will chair an emergency response meeting on Monday to discuss international travel and the flow of goods to and from Britain.

In the United States, Republican Majority Leader in the US Senate, Mitch McConnell, said a deal has been reached by Congressional leaders on a roughly $ 900 billion COVID-19 relief bill.

The news saw futures for the jump at first, only to come back flat as the morning wore on.

The MSCI’s largest Asia-Pacific stock index outside of Japan has wavered on either side of the dish after hitting a series of record highs. added 0.5% to its highest level since April 1991.

BofA analysts noted that $ 46.4 billion was invested in stocks in the past week, while the cash outflow was the largest in four months. There have been record flows in tech stocks and significant flows to consumer, healthcare, finance, real estate, and value stocks.

BofA chief investment strategist Michael Hartnett says a ‘sell signal’ was triggered for the first time since February as cash levels fell to 4.0% in the latest managers’ survey global funds.

“Positioning is getting wider and wider as political support and profits peak,” he said in a note. “Expectations of higher growth, lower inflation and lower interest rates have become a consensus and investors are positioning themselves for a very optimistic scenario of low volatility and high growth. ”


Another popular trade was the short sale of the US dollar and again the positioning seemed too extended by many steps which gave the currency some breathing space on Monday.

“Foreign exchange markets are awaiting the final results of a possible Brexit deal and a US tax package,” said Ned Rumpeltin, European head of foreign exchange strategy at TD Securities.

“We remain biased, however, to mitigate any ‘good news’ of the USD selloff on both fronts. These factors appear to be fully evaluated and the short-USD trade looks increasingly crowded. ”

The number edged up to 90.147 and is moving away from last week’s low of 89.723, which was the lowest since April 2018.

The euro also fell to $ 1.2216, while the dollar was a little firmer against the yen at 103.45.

The dollar was also boosted by a Nikkei report that Japanese Prime Minister Yoshihide Suga told finance ministry officials in November to ensure the dollar does not fall below 100 yen.

The break in the dollar’s decline saw gold prices reduce their recent gains somewhat to $ 1,883 an ounce.

Oil prices have seen profit taking after posting seven straight weeks of gains, with travel restrictions in Europe being another blow to demand.

dropped 79 cents to $ 48.31 a barrel, while futures fell 70 cents to $ 51.56.

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