US Futures Stock indicates extended rally

Investors are beginning the new year with an optimistic note, amid expectations that the large-scale launch of coronavirus vaccines will allow economic activity to return to pre-pandemic levels. Shares have been supported in recent weeks on such bets even as the pandemic continues to widen, with hospitalization rates in the US rising to a record high on Sunday.

“There is still bad news about the virus, but the market is analyzing this because of vaccines,” said Fahad Kamal, chief investment officer at Kleinwort Hambros. “We are certainly positively inclined, given the expected economic recovery, historically low interest rates, a lot of fiscal spending and the monetary policy that follows: all this positivity remains.”

In premarket trading, Tesla rose 2.8% after the electric car maker said it delivered a record 499,550 cars last year, just shy of its half-million target.

Flir Systems rose nearly 22 percent after Teledyne Technologies agreed to buy the detection technology maker in a business valued at about $ 8 billion.

New data on the health of the manufacturing sector added to the joy on Monday. Factories in Asia and Europe increased production as 2020 drew to a close, according to surveys conducted by purchasing managers, which showed strong growth in December. The results of a similar survey conducted by US producers, which will be launched at 9:45 am ET, are expected to indicate a strong increase in activity.

“We are going through renewed deadlocks, which reduces the activity to some extent, but what we have seen through the pandemic is that the production activity tends to last quite well,” said Sebastian Mackay, a multi-set fund manager at Invesco. “The production SMEs we get today are likely to be quite robust and will give some indication that the economy is recovering.”

In the bond markets, the yield on the 10-year Treasury benchmark rose to 0.926% from 0.913% on 31 December.

The dollar weakened, with the WSJ Dollar slipping 0.5%.

Paul Sandhu, head of multi-set quantum solutions for the Asia-Pacific region at BNP Paribas Asset Management, said he expects the dollar to continue to weaken, partly pressured by a likely rise in US infrastructure spending and other potential stimulus measures.

Abroad, the pan-continental Stoxx Europe 600 rose 1.6%.

The FTSE 100 in the United Kingdom was the best performing index in Europe, with 2.8%. The Christmas Eve trade deal between Britain and the European Union is likely to boost British stocks, Mr Mackay said.

“A lot of risks of queuing up a negative deal [Brexit] have been removed now. This will cause people to start sinking their toes back into the British market, ”he said.

Among European stocks, the British gaming company Entain grew by more than 28% after confirming a takeover bid from MGM Resorts International.

The bid values ​​the company at 8.09 billion pounds, the equivalent of 11.06 billion dollars.

Most major benchmarks in the Asia-Pacific region advanced by the end of the trading day. Kospi Composite in South Korea led to gains, rising by almost 2.5%.

China’s Shanghai Composite gained 0.9% at the close of trading, even after a private survey showed that China’s production activity moderated in December due to weak demand for the country’s exports.

Ben Luk, a senior multi-set strategist at State Street Global Markets, said the data indicates the continued fragility of the Chinese economy. He said, however, that this had allayed concerns that China’s central bank would act prematurely to strengthen monetary policy.

The Chinese yuan has strengthened to trade below $ 6.5 on the tightly controlled land market, with no signs of state-backed institutions intervening to stop the rally, said Ken Cheung, Asia’s chief foreign exchange strategist at Mizuho Bank in Hong Kong. Mr Cheung said he indicated that the Chinese authorities were comfortable with additional assessments and that they, in turn, helped the power to continue to gain foreign exchange gains both onshore and offshore.

“Many investors are also convinced that China’s growth story will remain intact as other major global economies struggle with the pandemic,” Mr Cheung said, adding that China’s faster growth and higher-yielding assets would could push the currency to 6.3 yuan per dollar in the first half of this year. The yuan has not traded below $ 6.5 a dollar since the 2018 trade war began.

Japan’s Nikkei 225 fell 0.7% at the end of trading, and the yen strengthened against the dollar after Prime Minister Yoshihide Suga said it could declare a state of emergency in Tokyo and surrounding areas as new coronavirus infections continues to grow.

Mr Sandhu said Asian markets had grown sharply where they remained in 2020 as investors continued to favor riskier assets, such as stocks in emerging markets such as China, South Korea and Taiwan. He said Asia is expected to be one of the strongest parts of global markets, due in part to its relative success in coronavirus containment.

Bitcoin, the most popular cryptocurrency, has reduced some of its earnings over the New Year holidays. It rose below $ 29,000 on New Year’s Eve to a high of more than $ 34,500 on Jan. 3, according to CoinDesk. On Monday, it amounted to about $ 31,555.

“Global investors are looking for new asset classes to invest in, and bitcoin looks quite attractive because it is an uncorrelated asset class,” said Mr. Sandhu.

Write to Joanne Chiu at [email protected] and Anna Hirtenstein at [email protected]