Asian share markets are off to a solid new year start on expectations central banks will keep money super cheap as the rollout of coronavirus vaccines helps slowly revive the global economy.
With so much growth already priced in, it might be hard for economies to match markets’ high hopes but for now momentum is with the bulls.
MSCI’s broadest index of Asia-Pacific shares outside Japan edged up 0.1 per cent, a whisker from a record high.
Japan’s Nikkei rose 0.4 per cent to peaks not seen since August 1990, having added 16 per cent last year. E-Mini futures for the S&P 500 were flat after touching an all-time high early Monday.
Investors are cautiously watching run-offs in Georgia Tuesday to determine who controls the Senate.
If the Republicans win one or both, they will retain a slim majority in the chamber and can block president-elect Joe Biden’s legislative goals and judicial nominees.
“If Democrats win both races, Vice President-elect Kamala Harris would be the tiebreaking vote, giving the party unified control of the White House and Congress,” noted analysts at CBA.
“This would raise the likelihood a material US infrastructure spending package gets fast tracked through Congress.”
The Federal Reserve’s December meeting minutes on Wednesday should offer more detail on discussions about making forward policy guidance more explicit and the chance of a further increase in asset buying.
The data calendar includes a raft of manufacturing surveys across the globe, which will show how industry is coping with the spread of the coronavirus and the closely watched ISM surveys of US factories and services.
Friday sees the December payroll report where median forecasts are for only a modest increase of 100,000.
Barclays analysts are tipping a fall of 50,000 in jobs, which would be a shock to hopes of a speedy recovery.
“A number of incoming indicators on activity point to slower momentum as the economy closes out the year, including data on labour markets where initial claims rose during the December survey period,” said economist Michael Gapen in a note.
Such a drop would add pressure on the Fed to ease further, another burden for the dollar which is already buckling under the weight of the massive US budget and trade deficits.
The dollar index was last at 89.828, not far from its recent 2-1/2-year low of 89.515 having shed almost 7 per cent in 2020.
The euro inched up to $1.2245, having run into profit taking late last week when it reached the highest since early 2018 at $1.2309. It gained almost 9 per cent over 2020.
The dollar held at 103.14 yen, having again survived a test of key support at 102.55. Sterling was firm at $1.3674 , within spitting distance of its recent top of $0.13686.
The decline in the dollar has been a support for gold, leaving the metal 0.6 per cent firmer at $1,910 an ounce.
Oil prices have steadied after a couple of months of solid gains, with Brent meeting resistance around $US52.50 a barrel. The rebound still left Brent down 21.5 per cent for the year, and WTI 20.5 per cent.
On Monday, Brent crude futures fell 8 cents to $US51.72, while US crude eased 12 cents to $US48.40 a barrel.