World stocks rose to record highs on Wednesday as drugmakers rolled out COVID-19 vaccines and U.S. congressional leaders expressed optimism about a stimulus deal, with the upbeat mood dragging the safe-haven dollar to 2-1/2 year lows.
In Europe, markets were cheered by the possibility of a Brexit trade deal, better-than-expected euro zone PMI economic data and a European Central Bank decision to let euro zone banks start paying dividends again if they have enough capital.
Markets are watching the U.S. Federal Reserve later on Wednesday for hints that it will extend its stimulus programme, and for whether it thinks the economy will suffer a double-dip recession or is on the cusp of a vaccine-inspired boom.
The MSCI world stock index hit a record high of 636.64, and was later up 0.4%. The index has climbed 15% since the beginning of November, propelled by trillions of dollars worth of global stimulus.
European stocks rose 1% to nine-month highs, with the UK’s FTSE 100 index jumping 1.1%.
The MSCI broadest index of Asia Pacific shares outside of Japan was 0.9% higher. The region is also near record highs and up 3.8% so far in December, putting it track for its best yearly performance since 2017.
U.S. congressional leaders reported substantial progress on Tuesday after two meetings of top Democrats and Republicans to end a months-long standoff on coronavirus relief and finalize a $1.4 trillion funding bill to avert a government shutdown.
The dollar fell to its lowest since April 2018 against a basket of currencies in anticipation of the easy Fed policy.
The euro rose above $1.22 for the first time since April 2018, and German government bond yields, which tend to rise on positive news on the economic outlook, hit a one-week high after data showed better-than-expected business activity in the bloc this month. The pound hit 12-day highs against the dollar and a one-week high against the euro. It gained after European Commission President Ursula von der Leyen said there had been progress on a Brexit trade deal and that the next few days would be critical.