SYDNEY (Reuters) – Asian stocks traded in Asia on Monday as investors cautiously welcomed news that an agreement had been reached on an expected U.S. stimulus bill, though that the “difficult” talks on Brexit were held without agreement in sight.
The pound fell 0.8% to $ 1.3408 after several European countries closed their borders with the UK as the country entered a tougher shutdown to combat a new strain of coronavirus.
Prime Minister Boris Johnson will chair an emergency response meeting on Monday to discuss international travel and the flow of goods into and out of Britain.
In the United States, Republican leader of the U.S. Senate majority, Mitch McConnell, said congressional leaders had reached an agreement on a $ 900 billion COVID-19 relief bill .
The news saw the S&P 500 futures jump at first, only to disappear as the morning progressed.
MSCI’s broader Asia-Pacific stock index outside of Japan fell on both sides of the plan after hitting a series of record highs. The Japanese Nikkei has been up 0.5% since April 1991.
BofA analysts noted that last week $ 46.4 billion in revenue fell in equities, while cash outflows were the largest in four months. There were record flows in technology stocks and large flows to the consumer, health, finance, real estate and securities sectors.
BofA chief investment strategist Michael Hartnett said a “sell signal” had been activated for the first time since February, as cash levels fell to 4.0% in the latest survey of global fund managers.
“Positioning is expanding as policy support and benefits are maximizing,” he said in a note. “Expectations of lower growth, inflation and interest rates have become consensus and investors are positioning themselves in a very rosy scenario of low volatility and high growth.”
AN AFFECTED TRADE
Another popular trade has been shortening the US dollar and again the positioning seemed excessive by many measures, which gave the currency a break on Monday.
“Currency markets are awaiting the final results of a possible Brexit deal and a US fiscal package,” said Ned Rumpeltin, European head of TD Securities ’foreign exchange strategy.
“However, we remain biased to dispel any ‘good news’ of selling dollars on both fronts. These factors have a full price and short-term US dollar trade seems increasingly crowded.”
The dollar index rose slightly to 90,147 and moved away from last week’s range of 89,723, which had been the lowest since April 2018.
The euro also fell to $ 1.2216, while the dollar was lower on the yen to 103.45.
The dollar also got a raise from a Nikkei report that Japanese Prime Minister Yoshihide Suga told Finance Ministry officials in November to make sure the dollar did not fall below 100 yen.
The pause in the falling dollar caused gold prices to stop at some of its recent gains at $ 1,883 an ounce. [GOL/]
Oil prices had some gains after gaining seven consecutive weeks of gains, with travel restrictions in Europe once again in demand. [O/R]
U.S. crude fell 79 cents to $ 48.31 a barrel, while futures on Brent crude fell 70 cents to $ 51.56 a barrel.