European Commission president Ursula von der Leyen said there was some progress in Brexit negotiations
U.S. stocks closed sharply higher overnight, as investors cheered further progress towards a vaccine and a formal clearance for President-elect Joe Biden’s transition to the White House after President Donald Trump finally gave the green light for the formal transfer of power to begin. Investor sentiment was also boosted by reports that Biden planned to nominate former Federal Reserve Chair Janet Yellen as Treasury Secretary. As a result, the Dow Jones Industrial Average rose 1.5%, the S&P 500 gained 1.6%, and the Nasdaq Composite rose 1.3%.
In Asia, equities followed Wall Street’s rally that saw the Dow pass the 30,000 milestone for the first time amid a spate of promising coronavirus vaccine developments and the improving political landscape in the United States. Japan’s Nikkei 225 gained 0.5%, South Korea’s Kospi was down 0.62% ahead of the policy decision of the Bank of Korea due on Thursday. In China, the Shanghai Composite bucked the trend, shedding 1.19%.
European equities opened marginally higher on Wednesday amid growing political certainty in the U.S. and positive coronavirus vaccine news. As of writing, the pan-European Stoxx 600 index was trading 1% higher, with most sectors in the green. Also on the positive side, European Commission president Ursula von der Leyen said there was some progress in Brexit negotiations.
Meanwhile, the dollar has steadied during the European hours following a retreat versus major counterparts earlier in the day. EURUSD briefly climbed to fresh early-September highs in the 1.1930 area before retreating to the 1.1900 zone. Despite the correction, the common currency retains a bullish tone ahead of fresh economic data out of the United States including the GDP report due later today.
Elsewhere, oil prices extended the rally towards fresh March highs in the $48.60 area, targeting the $50 psychological level amid a widespread optimism among global investors. Oil traders continue to cheer vaccine expectations but Brent could proceed to a bearish correction by the end of the day as the futures look overbought at the current levels while there are no fresh bullish drivers in the market at this stage.