LONDON: World stocks nudged higher on Monday on hopes for a coronavirus vaccine after AstraZeneca resumed its phase-3 trial, but the gains were limited as caution prevailed before a host of central bank meetings this week.
Sterling, which has been hurt by renewed Brexit turmoil, firmed before a key vote on British Prime Minister Boris Johnson’s plan to break international law by breaching parts of the Brexit divorce treaty with the European Union.
European stock markets opened higher but drifted back down. U.S. stock futures held firm in a positive sign for the Wall Street open, supported by M&A news.
In Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.9% to its highest in almost a week. Japan’s Nikkei firmed 0.7% after Chief Cabinet Secretary Yoshihide Suga won a landslide victory in a ruling party leadership election, paving the way for him to succeed Prime Minister Shinzo Abe.
Drugmaker AstraZeneca said at the weekend it has resumed British clinical trials of its COVID-19 vaccine, one of the most advanced in development, after getting the green light from safety watchdogs.
The World Health Organization reported a record one-day increase in global coronavirus cases on Sunday, with the total rising by 307,930 in 24 hours. The biggest increases were from India, the United States and Brazil.
“There is still some caution in markets because U.S. virus numbers appear to be picking up again in some states,” said Seema Shah, chief strategist at Principal Global Investors.
“The vaccine is positive news but there is a lot of scepticism about when it comes in and how widely it will be adopted.”
And as the European session wore on, some markets gave up their gains and turned negative.
Upcoming central bank meetings in the United States, Britain and Japan added to a sense of caution.
The U.S. Federal Reserve on Tuesday kicks off a two-day policy meeting — the first since unveiling its landmark shift to a more tolerant stance on inflation last month. The Bank of Japan and the Bank of England will announce their respective policy decisions on Thursday.
BREXIT WATCH
In currency markets, sterling bounced off recent 1-1/2 month lows against the dollar ahead of a parliamentary debate on the Internal Market Bill. After the debate, lawmakers will vote to decide if it should go to the next stage.
Johnson’s decision to explicitly break international law has plunged Brexit back into crisis less than four months before Britain is finally due to leave the EU’s orbit at the end of a post-Brexit transition period.
“The question will be how many Conservative MPs (members of parliament) rebel on the matter,” said Deutsche Bank strategist Jim Reid, referring to Johnson’s ruling party.
The dollar was a tad weaker at 105.95 yen, though still a long distance from its low this year of 101.2. The euro was a fifth of a percent firmer at $1.1870.
Turkey’s lira hit a fresh record low against the U.S. dollar and its dollar-bonds came under pressure after Moody’s cut the country’s sovereign rating and warned of the risk of a balance of payment crisis.
Oil prices fell, weighed down in part by Libya signaling it would end its months-long blockade and resume output, adding yet more supply to the market.
Brent crude was down 0.5% at $39.62 a barrel while U.S. West Texas Intermediate (WTI) crude futures slipped 0.6% to $37.11 a barrel.
Gold meanwhile was a touch firmer at at $1,943.72 per ounce.
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