A global equities rally pushed sharemarkets to new highs in the first week of trading in 2021.
Despite a wall of potential worry from a mendacious Donald Trump and his encouragement of the assault on US democracy, to surging COVID-19 infections and deaths, and new variants, to weak data for various economies, Wall Street hit a series of new all-time highs, Japan’s Nikkei rose to a 30 plus year peak and the ASX hit new multi-month highs.
At the same time commodities continued to rise – but safe havens such as US Treasury bonds (and Australian) and gold sold off as investors looked past America’s political unrest and focused on further stimulus to be announced this week from the incoming Biden administration to help the stumbling US and global economies.
By Friday’s close US shares had risen 1.8% for the week, Eurozone shares added 2.8%, Japanese shares rose 2.5% and Chinese jumped 5.5%.
Reflecting those positive global leads, Australian shares rose 2.6% to-10-month highs, with stocks leveraged to recovery and not stay at home rising in the energy, material, financials and consumer sectors. That more than offsetting weakness in health, property and IT stocks.
Oil, metal (especially copper) and iron ore prices also rose. Oil prices were boosted by that surprise Saudi output cut. The $A continued to push higher briefly breaching 78 US cents, despite a slight rise in the US dollar.
The Aussie eased to around 77.63 US cents at the close on Saturday morning, but still up 1% over the week.
Wall Street’s rise on Friday ignored the December labour market report earlier in the day that showed the US economy shed 140,000 jobs for the first time in eight months last month.
Instead of worrying, investors expect that the Biden’s incoming administration will pass bigger fiscal stimulus and infrastructure spending plans now that it will control the US Congress for the next two years.
Shares in electric car and battery maker Tesla again rose, taking its market capitalisation to more than $U800 billion for the first time ever.
MSCI’s gauge of stocks across the globe rose 0.84%% and ended up at an all-time high following broad gains in Asia and Europe.
Tokyo’s Nikkei hit its highest level since September, 1990 and markets in South Korea also performed strongly.
The Dow rose 56.84 points, or 0.18%, to 31,097.97 on Friday, the S&P 500 closed up 20.89 points, or 0.55%, at 3,824.68 and the Nasdaq added 134.50 points, or 1.03%, to 13,201.98.
The S&P 500 closed above 3,800 points for the first time on Thursday, while the Dow and the Nasdaq posted their fourth straight weekly gains.
The yield on US Treasury 10-year bonds rose to 1.119% at the close on Friday, from 1.071% late on Thursday.
That was a new 11-month high for the global interest rate benchmark.
That saw the Australian 10-year bond yield end at 1.12%, the highest for months and up 4 points on the day and 10 points in the last month.
The US dollar index rose 0.267%, with the euro down 0.38% to $1.2223.