Global shares surged on Monday after U.S. President Donald Trump signed $2.3 trillion COVID-19 Relief Bill and spending package which he had until now refused to sign.
Markets seemed happy with the move as it will restore unemployment benefits to millions of American citizens and will prevent a federal government shutdown in the world’s largest economy.
“As the Coronavirus pandemic has shown little sign of abating, the emergency aid was needed to avoid a sharp slowdown in the economy during the first quarter,” said Nobuhiko Kuramochi, market strategist at Mizuho Securities. “It would have been unsettling if we hadn’t had it by the end of the year.”
U.S. S&P futures rose 0.62% in first trade after Christmas holiday and had earlier reversed losses after a cryptic tweet by Trump – “Good news on COVID-19 Relief Bill. Information to follow” – helped offset worries about the further delay in stimulus spendings.
The European market is expected to follow the trend, with Euro Stoxx 50 futures rising 0.42%.
Japan’s Nikkei climbed up by 0.74%. MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.20%, but trade is slow with many markets still closed.
“It is positive for markets that we no longer have a chaos over stimulus, considering there was a chance of a partial government shutdown,” said Masahiro Ichikawa, chief strategist at Sumitomo Mitsui DS Asset Management.
“But on the other hand, markets have talked about that stimulus for a long time and I would say most of it has been already priced in.”
U.S. bond yields edged up, with the 10-year U.S. Treasuries yield up 1.5 basis point at 0.945%.
The rollouts of COVID-19 vaccines are also bolstering hopes of more economic normalisation next year, with Europe launching a mass vaccination drive on Sunday.
That, for now, has offset alarms over a new highly infectious variant of the virus that has been raging in the south-east of England and was confirmed in many other countries, including Japan, France and Canada, over the weekend.
Major currencies also changed a little after the news.
The dollar is widely expected to stay under pressure against other riskier currencies as investors bet on the continued recovery in the global economy and a prolonged period of loose U.S. monetary policy.
The euro traded at $1.2221, a tad below its 2.5 year high of $1.22735, while the yen changed hands at 103.42 per dollar.
The British pound changed hands at $1.3571, not far from 2.5 years high of $1.3625 hit earlier this month after Britain and the European Union reached an agreement on trade framework after Brexit.
Bitcoin also extended gains over the weekend to reach a new high of $28,377.94 before stepping back to $27,068, bringing the total value of the cryptocurrency in circulation to over $500 billion.
Oil prices edged down a tad, with U.S. crude futures down 0.3% at $48.09 per barrel.