Global stock markets have hit record highs as investors are optimistic that vaccines & stimulus measures will boost the economy in 2021.
On Thursday, The MSCI Index, that tracks stocks across the developed world, hit a record high of 639.33. The index has seen a total hike of 16% since vaccine tests and breakthroughs were first announced back in early November.
In the US, Wall Street continued to build on its rising performance and set new records for the US stock market. Included in this, is the Dow Jones Industrial Average, which is now trading above the 30,000 figure that it reached in November. Across the pond, share prices in Europe reached their highest levels since February – before the pandemic swept across the world.
Dollar sinks while Bitcoin rises
The US Dollar is usually the go-to currency for global investors in the midst of economic turmoil, but this year it slumped to its lowest value since 2018. This was, however, in part thanks to the US Central Bank’s asset stimulus program, in which the piled money into the system in an effort to charge towards its inflation target and full employment.
Bitcoin, on the other hand, hit a record high value of $23,000 in a second consecutive day of a sharp rise in gains. The cryptocurrency had been charging towards this figure last month, before hitting a slump in late February. Market analysts were confident the world’s oldest crypto coin would bounce back, and a huge surge in value is expected in 2021.
Across the pond, the 11th hour Brexit negotiations have reportedly progressed between the UK and the EU, boosting the pound sterling. On Thursday, Sterling rose 0.7% to $1.36 – its highest value in 31 months. The FTSE 250 Share Index, a domestic-focussed index in the UK reached its highest level since February thanks to the progress in negotiations.
Vaccine gives hope to investors, despite continued disruption
Despite the fact that the pandemic is certain to cause continued disruption to businesses and life in most countries across the world in 2021, the majority of investors are confident that vaccines will spark a strong economic recovery in the 2nd and 3rd quarters.
As well as the vaccine, US congressional negotiators are close to agreeing on a $900bn aid bill for Covid-19. Further economic support measures are expected from the US Government once the Biden Administration takes office, including the ultra low borrowing costs that are already in place.
The early throws of 2021 will most likely bring tough times and a winter of discontent, but global optimism for a bounce back in late spring and early summer remains high. In same breath, there has been a clear warning against complacency on global economy from IMF Chief.