- Global stocks gained on Wednesday as investors focused on Democratic efforts to agree on US stimulus.
- The “‘buy everything’ trade still has the upper hand and FOMO hasn’t gone,” a market analyst said.
- Oil continued to rally, buoyed by optimism over global economic recovery.
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Aiming to get the plan to a floor vote by the end of February, Democrats on Tuesday released draft legislation to maintain the income limit for stimulus checks at $US75,000 for individual taxpayers and $US150,000 for married couples.
The question still remains how quickly various parts of the bill will get through both the House and Senate, said Jim Reid, managing director of cross-asset research at Deutsche Bank. But Senate Finance Committee Chairman Ron Wyden has vowed to complete the bill by early March, while Speaker Nancy Pelosi said the House aims to vote on the full bill during the week of February 22.
But the “buy everything trade still has the upper hand and FOMO hasn’t gone, it’s just taken a little rest,” Jeffrey Halley, a senior market analyst at OANDA, said.
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Later Wednesday, investors will be watching Federal Reserve chairman Jerome Powell to hear his thoughts on the Biden administration’s American Rescue plan and what that could mean for monetary policy going forward.
The US dollar index dropped 0.2% to 90.27, largely driven by losses against the pound.
The greenback’s weakness in the face of Biden’s stimulus plan, the UK’s robust vaccine rollout, and the receding likelihood of the Bank of England imposing negative interest rates have allowed sterling to have a stellar start to the year, said Connor Campbell, a financial analyst at SpreadEx. Against the dollar, the pound has risen by 1.3% so far this year, while the euro has lost 0.7% and the yen has lost 1.2%.
Investors took hope from the number of daily coronavirus in the UK dropping to its lowest level in two months. The government is aiming to deliver the first vaccine dose to all those in the most at-risk groups by this coming Monday. In Germany, chancellor Angela Merkel has proposed a gradual reopening of stores and hotels from early March, according to Bloomberg.
In Asia, investors showed no signs of retreating and cashing in ahead of the Lunar New Year holiday.
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