Stocks rest after vaccine progress, dollar stuck at 2-1/2 year low

LONDON: World stocks hovered near record highs on Wednesday on hopes for a coronavirus vaccine and additional U.S. economic stimulus, though enthusiasm for riskier assets left the dollar stuck at a 2-1/2 year low.

Britain on Wednesday became the first country in the world to approve the Pfizer-BioNTech COVID-19 vaccine for use, saying it would start rolling it out early next week.

The two drug firms and competitor Moderna have also sought emergency use approval from European regulators this week.

Top U.S. health officials have announced plans to start vaccinating Americans as early as mid-December once regulatory approvals are in place. Nationwide deaths hit 2,295 on Monday the highest toll in six months.

"Approval of a highly effective vaccine may mark the beginning of the end to the COVID-19 economic turmoil and the beginning of a new bull market for equities," said Mike Bell, global market strategist at J.P. Morgan Asset Management.

"The scientists have come to the rescue and delivered what investors were hoping for Christmas."

Despite the positive news, European stocks struggled to add to their recent surge in early trading but MSCI's gauge of stocks across the globe inched up 0.1pc to keep it near an all-time high.

The dollar was stuck at 2-1/2 year lows against the euro and an index of major currencies as investors sought out the higher risk currencies that had fallen during the earlier stages of the pandemic.

Yields on euro zone government bonds edged up to their highest in three weeks at -0.51pc.

Pfizer and BioNTech said their vaccine could be launched in the European Union as early as this month, though a European regulator clouded the schedule when it said it would complete its review of their vaccine by Dec. 29.

Deutsche Bank analysts said the early approval and roll-out of the vaccine in Britain "raises the prospect that life could return closer to normal early next year".

Shares in BioNTech surged by more than 8pc before trimming gains, though European shares slipped overall by 0.3pc, shuffling below recent nine-month highs.

HOT OIL

Markets were also hoping for more fiscal relief. Top U.S. Senate Republican Mitch McConnell said on Tuesday that Congress should include new coronavirus stimulus in a $1.4 trillion spending bill aimed at heading off a government shutdown in the midst of the pandemic.

U.S. President-elect Joe Biden told the New York Times his priority is getting a generous aid package through Congress even before he takes office in January.

U.S. stock futures declined 0.23pc following a record closing high for Wall Street shares.

The pound was under some pressure, however, as a senior EU diplomat said UK's post-Brexit trade deal with the European Union "still hangs in balance".

Sterling fell more than 0.5pc to $1.3354. UK blue-chip stocks were steady.

In Asia, shares in China recovered from early losses and rose 0.12pc.

Tokyo stocks were little changed after setting a new 29-year high. Softbank Group shares fell 0.66pc after Bloomberg News said the tech investor is winding down its options trades on companies including Amazon.com Inc and Facebook Inc.

Oil prices were also lifted by the vaccine optimism, reversing earlier losses made after OPEC and its allies left markets in limbo by postponing a formal meeting to decide whether to lift output in January.

Brent crude futures rose 0.15pc to $47.49 per barrel, while U.S. crude was down 0.09pc at $44.51 per barrel.

Oil has raced up nearly 30pc over the last month.