By Chuck Mikolajczak
NEW YORK (Reuters) – A gauge of global stocks hit a record and oil prices jumped on Monday as the newest positive data for a potential COVID-19 vaccine and signs of economic recovery in Asia boosted sentiment.
U.S. stocks advanced, with the Dow Industrials setting a record as it neared the 30,000 mark for the first time, after pharma company Moderna <MRNA.O> said its prospective vaccine was 94.5% effective in preventing the illness, which has crushed economies across the globe.
Cyclical and small cap names, which generally benefit the soonest as an economy recovers from a recession, led the way higher, with energy <.SPNY>, industrial <.SPLRCI> and financial <.SPSY> the top-performing sectors. The Russell 2000 index of small cap stocks gained 2.37%.
“If you look at the move in energy, that is clearly a beneficiary from less restrictive work from home, or forced to not travel or do things,” said Andrew Mies, chief investment officer at 6 Meridien in Omaha.
The announcement by Moderna followed similarly upbeat news a week ago from rival Pfizer <PFE.N>.
Analysts cautioned, however, that there were still some near-term headwinds facing the market, including a continued rise in coronavirus cases and uncertainty over a possible fiscal stimulus package to support the economy before any vaccine could be distributed.
“You are definitely going to see the economy have another dip, another weak spot, and they are going to have to address that with extended unemployment because a lot of people are out of work and aren’t going to see any income coming in,” said Mies.
Graphic: Emergency benefits running out – https://graphics.reuters.com/USA-ECONOMY/GREATREBOOT/xklvybnolpg/USA-ECONOMY-GREATREBOOT.jpg
The MSCI World Index of global shares, building on strong overnight gains in Asia’s leading markets managed to extend gains after the Moderna announcement to hit an intraday record of 613.89.
The Dow Jones Industrial Average <.DJI> rose 470.63 points, or 1.6%, to 29,950.44, the S&P 500 <.SPX> gained 41.76 points, or 1.16%, to 3,626.91 and the Nasdaq Composite <.IXIC> added 94.84 points, or 0.8%, to 11,924.13.
The Dow closed at a record high, following the S&P 500, Nasdaq and Russell 2000 in setting fresh closing highs in recent days.
Shares in Europe also gained on the Moderna news, with the STOXX 600 closing at its highest level in over 8 months.
The pan-European STOXX 600 index <.STOXX> rose 1.18% and MSCI’s gauge of stocks across the globe <.MIWD00000PUS> gained 1.29%.
MSCI’s broadest index of Asia-Pacific shares outside Japan <.MIAPJ0000PUS> had hit its highest level since launching in 1987 as Japan pulled out of recession, China posted better-than-expected industrial output data and the region signed the largest ever trade deal.
The prospect of an end to demand-demolishing coronavirus-driven lockdowns also helped oil prices jump.
U.S. crude <CLc1> settled up 3.02% at $41.34 per barrel and Brent <LCOc1> was at $43.82, up 2.43% on the day. []
U.S. Treasury yields rose on Monday and the yield curve steepened in the wake of the vaccine data. Benchmark 10-year notes <US10YT=RR> last fell 5/32 in price to yield 0.9094%, from 0.893% late on Friday.
Graphic: Coronavirus cases Nov. 16 – https://fingfx.thomsonreuters.com/gfx/mkt/oakvexomnpr/Pasted%20image%201605511307200.png
After initially showing slight gains, the dollar edged lower against a basket of major currencies. Citibank said it expects the greenback to weaken as much as 20% next year due to the widespread distribution of COVID-19 vaccines and ongoing monetary easing.
The dollar index <=USD> fell 0.058%, with the euro <EUR=> up 0.14% to $1.1849.
(Reporting by Chuck Mikolajczak; Editing by Aurora Ellis, Bernadette Baum and Nick Zieminski)
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