Global Stocks Rise After UK Travel Rules Eased

Global stock indexes, gold and the pound rose on Wednesday, despite President Donald Trump stunned markets by signaling he might refuse to sign a stimulus bill that took months to agree.


U.S. stock futures rose 0.2 percent to 0.3 percent, suggesting trading would start later when they were slightly higher. In Europe, most major indices rose after France softened its stance on people and goods imported from the UK, where millions of people are isolated after the emergence of the more contagious strain COVID-19.


Trump on Tuesday criticized congress' $900 billion COVID-19 aid package.


In one video, he combined the bill with another federal government funding measure criticizing the inclusion of foreign aid, and said the $600-billion incentive cheques were too small. He asked Congress to increase the amount to $2,000.


Analysts at IG said in a note: "It is widely accepted that a direct payment of $600 per person will do little to improve the economic outlook, and Trump has called for increased payments closer to $2,000." If he succeeds, it will certainly give a boost to the markets, but there is also a chance that his opposition will return us to our original position."


Thanks to a series of COVID-19 vaccines in development, the stock market returned to record highs this month as investors expect mass immunization to help economic activity return to a more normal level in 2021.


Meanwhile, in Europe, the STOXX 600 index rose by 0.2%, primarily due to the growth of retail and telecommunications shares. Frankfurt's DAX rose 0.5 percent, helped by a rise in shares of carmaker Daimler, while London's FTSE 100 was one of the laggards in the region, falling 0.3 percent as the pound soared after travel restrictions eased.


The pound rose quite widely: by 0.5% against the dollar, by 0.3% against the yen and by 0.2% against the euro. This month, sterling rose 0.5% against the dollar, even as the clock ticks down to the UK's full exit from the EU on December 31. But its growth overshadowed the growth of the euro, which grew by 2.5%. against the dollar.


The UK, which has Europe's highest COVID-19 death rate, is still negotiating with the EU on trade after leaving the single market, even though a public referendum on Brexit took place almost five years ago.


In commodity markets, precious metals rose from the fall of the dollar, which caused gold to rise by 0.3% and silver by almost 1% for the day.


As the prospect of mass vaccination and economic recovery has become a reality, gold has struggled to maintain its popularity among investors, given that it often serves as a refuge in times of economic or financial stress.


However, the fall in the dollar has provided some support for gold, as investors usually take advantage of weakness in the US currency to convert them into dollar assets. The price of gold will rise by almost 5.5% in December, which is the first monthly increase since July.

29 December, 2020

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