The optimism in the oil market is due to expectations that OPEC+ countries may cap output at current levels in February
After Wall Street stocks finished 2020 at fresh all-time highs, Asian markets opened higher on the first trading day of 2021, as investors expressed optimism over the rollout of coronavirus vaccines. The Shanghai Composite Index in China gained 0.9% and the Hang Seng in Hong Kong rose 0.89%. The Kospi in Seoul rose 2.47% and Sydney’s S&P/ASX 200 added 1.47%. In Japan, the Nikkei 225 bucked the trend and declined nearly 0.7% after the reports that the government is considering declaring a state of emergency for Tokyo and three surrounding prefectures due to surging virus cases.
In Europe, a Brexit trade deal and coronavirus vaccine bolstered expectations of a strong economic rebound and sent equities higher on Monday. The pan-regional STOXX 600 index rallied 1.2% to refresh February 2020 highs. The U.K. FTSE 100 surged 2.9% the German DAX and French CAC 40 also gained. In the UK, drug company AstraZeneca rose 2.5% on the first day of the rollout of its vaccine. The company also sold the rights for a hypertension drug for $400 million to German pharmaceutical company Cheplapharm Arzneimittel.
Meanwhile, the dollar came under renewed selling pressure at the start of the week, staying on the defensive as risk-on sentiment prevails in the global financial markets. As such, EURUSD is now back around the 1.2300 figure as traders continue to favor the riskier assets against the backdrop of solid prospects of a strong economic rebound this year. On the data front, the final December Manufacturing PMI in the Eurozone came in a tad lower than the preliminary reading at 55.2. In Germany, the index followed suit at 58.3 versus 58.6 from the advanced data.
In other markets, Brent crude rallied to fresh March highs around $53.30 earlier in the day before correcting lower amid profit-taking. As of writing, the barrel was changing hands in the $52.50 area, still up on the day. The optimism in the oil market is due to a weaker dollar, positive risk sentiment, as well as expectations that OPEC+ countries may cap output at current levels in February at a meeting later today.
