SYDNEY (Reuters) – Asian stocks faltered and the pound fell on Monday, as unrest over a new coronavirus strain that closed much of the UK offset the news that an agreement had finally been reached in a expected U.S. stimulus bill.
The pound plunged 1.2% to $ 1.3352 after several European countries closed their borders with the UK as the country entered a tougher closure 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.
This was combined with the lack of a Brexit agreement to reduce 1.1% of FTSE futures, while EUROSTOXX 50 futures lost 1.7%.
MSCI’s broader Asia-Pacific stock index outside of Japan fell 0.2% after hitting a record high last week. The Japanese Nikkei invested the first gains to fall 0.4%, with a discount of the maximum since April 1991.
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, and only disappeared until a loss of 0.2% as the session progressed.
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 overly broadened by many measures, which gave the currency a respite 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 was confirmed at 90,453 and moved away from last week’s range of 89,723, which had been the lowest since April 2018.
The euro also fell to $ 1.2190, while the dollar remained stable at the yen at 103.36.
The dollar also garnered support 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 general risk mood caused gold prices to rise 0.8% to $ 1,895 an ounce.
Oil prices made a profit after gaining seven consecutive weeks of gains, with travel restrictions in Europe once again in demand.
U.S. crude fell $ 1.57 to $ 47.53 a barrel, while futures on Brent crude fell $ 1.65 to $ 50.61.
Edited by Sam Holmes and Kenneth Maxwell