Asian equities mostly bounded higher yesterday, on the first business day of the year.
With uncertainty over Brexit and a new US stimulus gone, sights are now on the economic recovery from the calamity that was 2020.
Investors are also keeping tabs on the US, where Georgia has two runoff elections that will decide which party holds control of the Senate.
Tokyo’s Nikkei 225 closed 0.7% down at 27,258.38 points, Hong Kong’s Hang Seng ended 0.9% up at 27,472.81 points and Shanghai’s Composite finished 0.9% up at 3,502.96 points.
European stock markets rallied, boosted by fervent takeover activity, Brexit relief and vaccine-driven economic optimism on the first trading day of 2021.
London’s FTSE 100 shares index fizzed 3.0% higher on its first day since Britain finalised a divorce from the European Union last week, as dealers noted no signs of the Brexit chaos some had feared.
The pound scored a 2.5-year peak at $1.3704 to extend last week’s impressive run after the announcement of a breakthrough Brexit trade deal on Christmas Eve.
It later pulled back somewhat.
Oil hit ten-month highs before a virtual gathering of crude producing cartel Opec and its allies to decide February output levels, after coronavirus ravaged demand in 2020.
Bitcoin retreated yesterday to $30,600, one day after surging to an all-time pinnacle near $35,000 as risk-seeking investors piled into the cryptocurrency.
“The FTSE 100 is kicking off 2021 in style... With Brexit finally here, there are precious few signs of initial difficulties,” said IG analyst Joshua Mahony.
Britain finally left the EU’s single market and customs union late on December 31, ending almost 50 years of integration with the continent.
Customs border checks have returned for the first time in decades, and despite the free-trade deal allowing Britain continued access to Europe’s nearly 450mn consumers, queues and disruption from additional paperwork are expected.
Investors are meanwhile hopeful that the ongoing rollout of Covid-19 vaccines — with the first UK patient receiving the Oxford University/AstraZeneca’s jab — will help offset surging infections and herald a return to normality.
“Markets are being helped by the Oxford-AstraZeneca story as there is a growing feeling that the pharma sector is in a better position to tackle the health crisis,” said CMC Markets analyst David Madden.
European stocks were also propelled yesterday by merger and acquisition activity on the first trading day of the New Year.
British betting company Entain, which owns high street chain Ladbrokes, revealed it has turned down a takeover offer worth £8.0bn ($10.9bn, €8.9bn) from US casino giant MGM.
The news sent Entain’s share price soaring almost 30% to 1,462 pence, topping the FTSE 100 risers board.
“Entain Group understandably leads the way after a rejected takeover bid from MGM Resorts highlighted the potential for a new enhanced offer in the near future,” added Mahony.
In Paris, shareholders in French automaker PSA almost unanimously approved a merger with US-Italian group Fiat Chrysler, in a deal that will create the world’s fourth-largest carmaker by volume.
In early afternoon deals, PSA shares won 2.4% to €22.91 in Paris, while Fiat shares added 2.1% to €14.96 in Milan.