Global shares rally after the House approves $2,000 stimulus checks; UK markets hit 11-month highs after Brexit deal
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- Global shares rose after the House of Representatives approved a bill increasing stimulus checks for households from $600 to $2,000.
- US stock futures point to S&P 500 and Dow Jones opening at or near record highs later.
- Last week's deal between the UK and the EU on Brexit lifted London blue-chip stocks to their highest since the start of the year.
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Global stock markets rose on Tuesday after the US House of Representatives voted to increase stimulus checks for American households, while in Europe, relief over a hard-won Brexit deal ignited a sharp rally in UK indices to their highest in nearly 11 months.
The House of Representatives passed a bill to increase the $600 stimulus checks to $2,000 in a vote on Monday, finally putting an end to months of wrangling.
The vote passed 275 to 134. Forty-four House Republicans joined the Democrats in approving the bill.
President Donald Trump signed the $900 billion bipartisan coronavirus relief package - which includes the $600 stimulus checks - on Sunday, renewing his calls for Congress to raise the amount of the checks to $2,000.
The United States has the worst death rate from COVID-19, with nearly 335,000 fatalities, and a soaring infection rate, with cases now topping 19 million.
US stock index futures rose by 0.5-0.6%, suggesting the benchmark indices could open at, or near, Monday's record highs.
"Whilst markets are trading range-bound owing to thin holiday volume, the prospect of larger stimulus aid is lifting sentiment and future demand expectations," CityIndex strategist Fiona Cincotta said.
"Near term concerns over the Covid variant and tighter lockdown restrictions in the US and Europe could limit gains," she said, referring to a new, fast-spreading coronavirus variant first detected in the UK.
In Europe, London's benchmark FTSE 100 index was the best performing index, gaining 2.3% on the day and nearing 10-month highs, while the mid-cap FTSE 250 index rallied 1.6% to its highest since late February.
The UK and the European Union struck an eleventh-hour deal on trade after Britain leaves the single market on December 31, avoiding a potentially catastrophic exit that could heap more misery on the economy, along with another round of harsh lockdowns in light of a new variant of the novel coronavirus.
Pharmaceutical companies, such as AstraZeneca and GlaxoSmithKline, along with food and beverage makers like Unilever and Diageo, were among the biggest gainers on the blue-chip index.
The pound meanwhile gained fairly broadly, rising 0.4% against the dollar, by 0.3% against the yen and up 0.2% against the euro.
"Brexit is finally done, but the devil is in the details and the UK's trade deal is producing a scramble for businesses to adjust to new terms and conditions over a short period of time," OANDA analyst Ed Moya said.
"The economy will have some bumps and bruises as the economy battles COVID lockdowns and adjusts to new goods and service trade rules," he added.
Asian benchmark indices closed mostly higher, with Tokyo's Nikkei up 2.7%, while Hong Kong's Hang Seng gained 1%. The Shanghai Composite fell 0.5%.
In the commodities market, oil rose 1%, bringing gains so far this month to 8%. The rollout of effective vaccines has renewed investor optimism over the outlook for energy demand next year, in spite of major forecasters warning that consumption may not pick up as quickly as many hope.
Brent crude futures were last up 1% around $51.36 a barrel, while WTI futures rose 0.9% to $48.04 a barrel.
"The prospects for a gradual rollout of vaccines and the passing of US stimulus package have fueled a whopping 45% rally in WTI prices from early November through mid-December," Margaret Yang, a strategist at DailyFX said in a note.
"For now, prices appear to have entered a period of consolidation, waiting for more concrete evidence to justify the rally," she said.
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