GLOBAL MARKETS-Stocks surge on stimulus hopes; dollar depressed

  • Reuters
  • Stock Market News
GLOBAL MARKETS-Stocks surge on stimulus hopes; dollar depressed
Credit: © Reuters.

* S&P 500, Nasdaq hit record highs

* MSCI all-country world index strikes all-time high

* Dollar hits two-year low

* Fed confirms backstop, Congress mulls stimulus

* Brexit trade deal hopes boost sterling to $1.36

By Matt Scuffham

NEW YORK, Dec 17 (Reuters) - Global stocks scaled new peaks on Thursday, fueled by growing optimism that deals will be reached over a fresh U.S. stimulus package and a post-Brexit trade deal between the United Kingdom and the European Union.

From stocks to safe-haven gold and volatile bitcoin, financial assets were in festive mood. Bitcoin hit another all-time high after first shattering the $20,000 level on Wednesday.

The U.S. dollar was the day's standout loser, as the general risk-on mood sent the safe haven currency to 2-1/2-year lows against major peers.

U.S. congressional negotiators were "closing in on" a $900 billion COVID-19 aid bill expected to include $600-$700 stimulus checks to individuals, lawmakers said on Wednesday.

Progress on a stimulus package overshadowed continued concerns over the economic impact of the pandemic, highlighted by U.S. weekly jobless claims hitting a three-month high on Thursday and weak U.S. retail sales data on Wednesday. S&P 500 and the Nasdaq hit record highs.

The Dow Jones Industrial Average .DJI rose 122.74 points, or 0.41%, to 30,277.28, the S&P 500 .SPX gained 17.26 points, or 0.47%, to 3,718.43 and the Nasdaq Composite .IXIC added 76.20 points, or 0.6%, to 12,734.39.

"Wall Street is completely focused on stimulus talks and ignored deteriorating US economic data," said Edward Moya, senior market analyst at OANDA in New York.

The dollar index .DXY , which tracks the greenback versus a basket of six currencies, fell 0.683 points or 0.76%, to 89.767.

"The dollar is reflecting the amount of debt that the U.S. is assuming and that's probably going to increase as we continue to battle the pandemic," said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York.

U.S. Federal Reserve Chairman Jerome Powell vowed on Wednesday to keep pouring cash into markets until the U.S. economic recovery is secure.

Bond traders, however, were disappointed he did not extend the Fed's purchase program deeper down the yield curve, and U.S. Treasuries sold off at longer tenors, but others took it as a signal the bank will have their back. US/

The MSCI world stock index .MIWD00000PUS reached a new high, rising 4.29 points or 0.67%, to 641.39. The index has climbed 16% since the end of October. Since then, multiple COVID-19 vaccine breakthroughs have been announced.

European stocks .STOXX and the euro rallied for the fourth straight session as investors built up positions in riskier assets, anticipating a sharp economic recovery in 2021 backed by wider vaccine rollouts and ultra-easy monetary policy.

Europe's broad FTSEurofirst 300 index .FTEU3 added 0.23%, at 1,533.

The British pound hit May 2018 highs on hopes of a post-Brexit trade deal. Sterling maintained gains despite senior British minister Michael Gove putting the chances of securing a trade deal with the EU at less than 50%. euro EUR= was last up 0.57%, at $1.2266.

The Swiss National Bank also kept its ultra-expansive monetary policy on hold, keeping the world's lowest interest rates and staying ready to launch currency interventions despite being labelled a currency manipulator by the United States.

The Swiss franc was last at 0.8841.

Better-than-expected labour data in Australia pushed the Aussie AUD= as high as $0.7624, its strongest since mid-2018. AUD/

The Aussie is also riding high on surging prices for iron ore and a mood that has pushed currencies in Malaysia MYR= , Singapore SGD= , Thailand THB= , Taiwan TWD= , Sweden SEK= and Norway NOK= to milestone peaks. EMRG/FRX

The kiwi NZD= rose to its strongest since early 2018 after New Zealand's economic growth beat expectations. broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rose 3.67 points or 0.57%, to 651.3.

The yen JPY= was last down 0.40%, at $103.0700.

Spot gold prices XAU= rose $19.8344 or 1.06%, to $1,883.98 an ounce. U.S. gold futures GCv1 were up 1.9% at $1,894.

Brent crude LCOc1 settled at 51.46 a barrel, up $0.38, or 0.7%. U.S. crude CLc1 settled at $48.33 a barrel, up $0.51 or 1.1%.

(Editing by Chizu Nomiyama)

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