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GLOBAL MARKETS-Stocks mixed with stimulus hopes offset by COVID concerns

Published 26/01/2021, 02:35 am
© Reuters.
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* Graphic: Global asset performance http://tmsnrt.rs/2yaDPgn

* Graphic: World FX rates http://tmsnrt.rs/2egbfVh

By Matt Scuffham and Ritvik Carvalho

NEW YORK/LONDON, Jan 25 (Reuters) - Global stock markets lacked direction on Monday, with optimism over a $1.9 trillion U.S. stimulus plan offset by increasing COVID-19 cases and delays in vaccine supplies.

Equity markets have scaled record highs in recent days on bets vaccines will start to reduce infection rates worldwide and on a stronger U.S. economic recovery under President Joe Biden.

However, investors are wary about towering valuations amid questions over the efficacy of the vaccines in curbing the pandemic and as U.S. lawmakers continue to debate a coronavirus aid package. risk for these markets is that, after a bumper couple of months, investors may start to wonder whether they're looking a little frothy," said Craig Erlam, senior market analyst at OANDA Europe

U.S. stocks were mixed in early trading.

By 10:33 a.m. ET (1533 GMT), the Dow Jones Industrial Average .DJI fell 76.41 points, or 0.25%, to 30,920.57, the S&P 500 .SPX gained 15.93 points, or 0.41%, to 3,857.4 and the Nasdaq Composite .IXIC added 165.34 points, or 1.22%, to 13,708.40.

The MSCI world equity index .MIWD00000PUS , which tracks shares in 49 nations, rose 2.24 points, or 0.34 percent, to 668.93.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rose 11.48 points, or 1.6 percent, to 729.94.

European stock markets opened higher but then fell, with the pan-European STOXX 600 .STOXX down 0.8%. A measure of the continent's 50 biggest stocks fell 0.6% .STOXX50 . .EU

U.S. investors are awaiting a busy earnings week, with tech giants Apple Inc AAPL.O , Facebook Inc FB.O , Tesla Inc TSLA.O and Microsoft Corp MSFT.O all due to report results.

A rally in U.S. tech stocks to near-record highs on Friday helped fuel gains in their counterparts in Asia and Europe. A European basket of tech stocks gained 0.5% .SX8P . In Asia, Chinese tech giant Tencent soared 11% 0700.HK .

All eyes are on Washington, D.C., as U.S. lawmakers agreed that getting COVID-19 vaccines to Americans should be a priority even as they locked horns over the size of the pandemic relief package. markets have been eyeing a massive package, though disagreements have meant months of indecision in a country suffering more than 175,000 COVID-19 cases a day with millions out of work.

Global COVID-19 cases are inching toward 100 million, with more than 2 million dead. the recent outperformance in tech stocks, investors have reiterated views that cyclical and value stocks will outperform as economies recover.

"While renewed lockdowns and mobility restrictions around the world have supported 2020 stay-home beneficiaries, we do not think the rotation into cyclicals is over," said Mark Haefele, chief investment officer at UBS Global Wealth Management.

He said a broadening economic recovery, a normalization of economic activity as vaccination programs continue, and attractive valuations for emerging-market stocks relative to developed markets were reasons for UBS shifting its preference to emerging markets.

Sentiment in Asia was boosted by a report that China had surpassed the United States as the largest recipient of foreign direct investment in 2020, with $163 billion in inflows. broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rose 1.6%.

Japan's Nikkei .N225 rebounded from falls in early trading to be up 0.7%.

Australian shares .AXJO added 0.4% after the country's drug regulator approved the Pfizer/BioNTech COVID-19 vaccine with a phased rollout likely late next month. shares rose, with the blue-chip CSI300 index .CSI300 up 1%. Hong Kong's Hang Seng index .HIS leapt 2.4% led by technology stocks.

The dollar index .DXY , which tracks the greenback versus a basket of six currencies, rose 0.223 point or 0.25 percent, to 90.461. Major currency trading pairs were trapped in a tight range as markets awaited the Federal Reserve's Wednesday meeting.

The euro EUR= was down 0.41 percent, at $1.2120.

In commodities, Brent LCOc1 was last down $0.05, or 0.09 percent, at $55.36 a barrel. U.S. crude CLc1 was down $0.04, or down 0.08 percent, at $52.23 per barrel.

Spot gold prices XAU= rose $4.21 or 0.23 percent, to $1,856.76 an ounce.

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