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GLOBAL MARKETS-Revived Brexit hopes lift stocks and sterling

Stock Markets Dec 14, 2020 10:30
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* S&P 500 futures also up 0.5% as U.S. rolls out vaccine
* Sterling gains more the 1% as Brexit talks extended
* Eyes on U.S. Congress, Fed for stimulus guidance
* Graphic: 2020 asset performance http://tmsnrt.rs/2yaDPgn
* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh

By Marc Jones
LONDON/SYDNEY, Dec 14 (Reuters) - Stocks began the week with
robust gains as investors gauged the chance of added U.S. fiscal
and monetary stimulus, while the British pound rose as a
last-gasp extension to Brexit talks dodged a difficult divorce.
Europe opened with stocks .STOXX up 0.75% and the euro up
on the dollar .EU after London and Brussels agreed on Sunday
to "go the extra mile" to try to reach a trade agreement.
"We are going to give every chance to this agreement ...
which is still possible," the European Union's Brexit
negotiator, Michel Barnier, told journalists before updating
envoys from the 27 EU countries on Monday.
"Two conditions aren't met yet. Free and fair competition
... and an agreement which guarantees reciprocal access to
markets and waters. And it's on these points that we haven't
found the right balance with the British. So we keep working."
Progress on coronavirus vaccines also cheered risk
sentiment, with the first doses shipping across the United
States as part of an effort to inoculate more than 100 million
people by the end of March. "The vaccine has and will likely continue to provide a
tailwind to the market that is allowing investors to look beyond
record case levels, hospitalisations, and deaths," analysts at
JPMorgan said in a note.
E-Mini futures for the S&P 500 ESc1 responded by rising
0.5%, while March Treasury bond futures TYc1 slipped 4 ticks.
EUROSTOXX 50 futures STXEc1 added 0.5% and FTSE futures
FFIc1 0.1%.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS edged up 0.1%, after a string of record highs
last week.
Japan's Nikkei .N225 rose 0.3% as a survey showed the mood
among Japanese businesses had improved in the December quarter.

Sterling was the day's big mover, gaining on both the euro
and the dollar as what last week had appeared to be evaporating
prospects of a Brexit agreement, came back to life. Against the dollar, the pound rose 1.5% to $1.3382 GBP=D3
from Friday's close of $1.3222. The euro slipped 0.9% versus the
UK currency to 90.73 pence EURGBP=D3 , off a three-month top of
92.29.
"Even in the face of amped up rhetoric, we continue to think
a deal is the most plausible outcome," said AXA Group chief
economist Gilles Moec.
At this stage, he said, failure would probably stem from
either Brussels or London pushing the envelope a bit too far,
too late to get an agreement done in time.
"From this point of view, the fact that no new deadline has
been tagged on the latest round of talks is positive in our
view."
That could see the euro climb to 96.00 pence, analysts at
Goldman Sachs said in a note; a deal could send the pound
rallying to 87.00 per euro.

FED AHEAD
The single currency has already been gaining against the
U.S. dollar, which many analysts believe has entered a cyclical
downtrend as the prospect of a vaccine-driven global economic
recovery lessens the need for safe havens.
The euro was up 0.3% on Monday at $1.2150 EUR= and within
striking distance of its recent 31-month top of $1.2177. The
dollar index stood at 90.622 =USD , near its recent trough of
90.471.
An added hurdle for the dollar will be the Federal Reserve's
policy meeting on Dec. 15-16. The market is assuming the central
bank will merely refine its forward guidance on policy rather
than buying more bonds or "twisting" its portfolio to add more
longer-dated debt.
The Bank of England on Thursday and the Bank of Japan on
Friday will close out the central banks meetings for 2020 this
week. Before that, Wednesday sees the global flash PMIs and
Tuesday sees China's monthly data dump.
"The risk is then if the Fed does unveil a surprise twist at
this meeting, then Treasuries could rally and the USD could
fall," said Tapas Strickland, a director of economics at NAB.
An extra wrinkle is the chance of a U.S. deal on fiscal
stimulus after a top Democrat hinted a compromise was possible
to get an agreement past Republican objections. Reuters reported a $908 billion relief plan will be split in
two to win approval and could be introduced as early as Monday.
The talk of stimulus helped put a floor under gold, leaving
it lower at $1,836 an ounce XAU= . Gold has gained more than
21% this year.
Oil prices rose on Monday; it has now rallied for six weeks
straight as investors priced in a global recovery next year.
O/R
U.S. crude CLc1 rose 33 cents to $46.90 a barrel. Brent
crude LCOc1 futures rose 39 cents to $50.36. Iron ore, which
has surged 21% since the start of December, dropped over 2%
though. SZZFc1
Analysts at Deutsche Bank said it was likely to be caused by
a call from one of China's leading mills group for authorities
to investigate ore's rally after allegations of illegal
activities.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Asia stock markets https://tmsnrt.rs/2zpUAr4
Asia-Pacific valuations https://tmsnrt.rs/2Dr2BQA
Rebound of major world markets https://tmsnrt.rs/370lXbY
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

GLOBAL MARKETS-Revived Brexit hopes lift stocks and sterling
 

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