World stocks hit record on economic recovery, vaccine optimism

NEW YORK (Reuters) – A gauge of global stocks hit a record on Monday as the latest batch of positive data for a possible COVID-19 vaccine boosted sentiment, along with signs of economic recovery in Asia, while oil prices jumped.

FILE PHOTO: Passersby wearing protective face masks walk past a screen displaying Nikkei share average and world stock indexes outside a brokerage, amid the coronavirus disease (COVID-19) outbreak, in Tokyo, Japan October 5, 2020. REUTERS/Issei Kato

U.S. stocks climbed, with the Dow Industrials nearing the 30,000 mark for the first time, thanks to news from pharma company Moderna MRNA.O saying its prospective vaccine was 94.5% effective in preventing the illness which has crushed economies across the globe.

Cyclical names, which generally benefit the soonest as an economy recovers from a recession, led the way higher, with energy .SPNY, industrial .SPLRCI and financial .SPSY sectors the top performing.

The announcement by Moderna followed similarly upbeat news a week ago from rival Pfizer PFE.N.

The MSCI World Index of global shares, building on strong overnight gains in Asia’s leading markets and a stronger open for most European bourses, managed to extend gains after the Moderna announcement to hit a record.

“The global population couldn’t have asked for more from the Moderna vaccine,” said Seema Shah, chief strategist at Principal Global Investors in London.

“Today’s vaccine news should make investors more tolerant of the surging virus cases, permitting them to look through to the strong dynamics that seem to be taking shape for 2021.”

The Dow Jones Industrial Average .DJI rose 401.05 points, or 1.36%, to 29,880.86, the S&P 500 .SPX gained 35.09 points, or 0.98%, to 3,620.24 and the Nasdaq Composite .IXIC added 82.14 points, or 0.69%, to 11,911.43.

Shares in Europe also gained on the Moderna news, with the STOXX 600 touching its highest in over 8 months.

The pan-European STOXX 600 index .STOXX rose 1.38% and MSCI’s gauge of stocks across the globe gained 1.18%.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS had hit its highest level since launching in 1987 as Japan pulled out of recession, China posted better-than-expected industrial output data and the region signed the largest ever trade deal.

The prospect of an end to demand-demolishing coronavirus-driven lockdowns also helped oil prices climb.

U.S. crude was up 3.91% at $41.70 per barrel and Brent was at $44.43, up 3.86% on the day.

U.S. Treasury yields rose on Monday and the yield curve steepened in the wake of the vaccine data. Benchmark 10-year notes last fell 3/32 in price to yield 0.9029%, from 0.893% late on Friday.

While the dollar edged higher against a basket of major currencies following last week’s modest gains, sterling slipped versus the greenback as the clock was running down on Brexit trade talks, European Union diplomats warned Britain.

The dollar index rose 0.012%, with the euro EUR= up 0.03% to $1.1835.

Sterling GBP= was last trading at $1.3184, down 0.02% on the day.

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