08 January 2021 : So much for a slow start to the new year. From a pair of tense Senate runoffs, to a mob breaching Capitol Hill and even a shock oil supply cut from Saudi Arabia, global investors have had plenty to take in this week. Yet, the buying momentum in stocks has continued unabated.

After overcoming the slight wobble on Monday, US equity benchmarks have since posted new record highs with futures contracts in the green at the time of writing. The MSCI ACWI index, which measures the overall performance of stocks across emerging and developed markets, also registered its highest ever close yesterday. Asian equity benchmarks are climbing on Friday, with the MSCI Asia Pacific index advancing some two percent already so far this year.

Reasons aplenty to look up

Stock market bulls have many reasons to expect further gains. Investors are getting more comfortable wading further out into risk-on waters, considering that the spillover from last year’s downside risks have subsided, including Brexit concerns and the US election cycle. Yesterday, outgoing President Trump finally stated his intention for a smooth transition of power.

Now, investors are gravitating towards the increased likelihood of more incoming US fiscal stimulus in light of the Democrats’ sweep of the Georgia Senate runoffs. The latest FOMC meeting minutes underscore policymakers’ will to stick to its supportive policy stance. Also helping the risk mood is the continuation of the Covid-19 vaccine rollout, with Moderna’s vaccine receiving the EU’s blessing this week.

Such elements are fostering a highly supportive environment for global equities, affording investors the luxury of looking past the persistent pandemic woes.

Source: Han Tan, Market Analyst at FXTM

Reporting for EasyKobo on Friday, 08 January 2021 in Lagos, Nigeria