European shares were mixed on Thursday and world shares held near all-time highs after a strong Asian session in which market euphoria around COVID-19 vaccines, Joe Biden’s U.S. presidential election win and hopes for further stimulus outweighed worsening U.S. data.
World shares are having their best month on record this November, boosted by a slew of positive vaccine announcements and hopes that Biden’s administration will deliver more economic stimulus and political stability.
The MSCI world equity index, which tracks shares in 49 countries, hit an all-time high on Wednesday and held close to this level on Thursday, up 0.2% on the day at 0821 GMT, as markets shrugged off the latest rise in U.S. jobless claims.
Europe’s STOXX 600, which is also having its best month ever, up 14.5% in November, was flat on the day, while London’s FTSE 100 was down 0.4%.
Markets also took a boost from minutes from the U.S. Federal Reserve’s Nov. 4-5 meeting, which showed that officials discussed how the central bank’s asset purchases could be adjusted to provide additional support to the economy.
The minutes said policymakers may give new guidance about its bond-buying “fairly soon”.
“Downward pressure on the U.S. dollar has been reinforced by the release of the latest FOMC minutes which signalled that the Fed is likely to strengthen their QE program at the next FOMC meeting on 16th December,” wrote MUFG strategist Lee Hardman in a note to clients.
“A strong commitment to maintain QE stimulus would provide further reassurance that the punch bowl is unlikely to be taken away as soon as next year,” he said.
The U.S. dollar slipped around 0.1% and was at 91.922 versus a basket of currencies at 0828 GMT, having touched its lowest in nearly three months in early London trading.
It also lost out versus the safe-haven Japanese yen, down 0.2% on the day at 104.3 at 0832 GMT.
U.S. markets are closed for Thanksgiving on Thursday. Biden urged Americans to avoid big family gatherings and to wear protective masks and maintain social distancing as COVID-19 cases soar.
“While the release of vaccine results is promising, we do not know yet when this pandemic will be completely over and that is what investors will continue to struggle with,” analysts at the FXTM brokerage told clients.
“Wednesday’s economic data showed that U.S. jobless claims increased for a second consecutive week suggesting more pain ahead as business restrictions and partial lockdowns continue to hurt employment,” they added.
In Europe, a survey showed that German consumer morale fell further heading into December, as a partial lockdown in Europe’s largest economy hit households’ income and willingness to spend money.
German Chancellor Angela Merkel told parliament that lockdown measures will be in place until at least the end of December and possibly longer.
The euro was up 0.1% against the dollar, at $1.1926 at 0831 GMT. Euro-sterling was up 0.2% at 89.225.
Markets participants are closely watching trade talks between Britain and the European Union, with little more than a month until the status-quo transition period ends on Dec. 31.
Ireland’s prime minister said on Wednesday that a “good result” was still possible, but Ursula von der Leyen, head of the European Commission, said that the bloc was ready for the possibility of a no-deal exit.
Britain’s finance minister said on Thursday that “it’s clear what the shape of the deal looks like” but that the United Kingdom should not be stretching for a deal at any cost.
Euro zone government bonds were little changed, with Germany’s benchmark Bund yield at -0.571%, as investors waited for the European Central Bank’s October meeting minutes.
Oil prices slipped, stalling a rally which saw futures hit 8-month highs on Wednesday.
Gold prices picked up as investors bet that the grim U.S. economic data would lead to further stimulus.