Stimulus hopes push global equity markets to new records, bonds hit 11-mth lows

David Randall

By David Randall

NEW YORK (Reuters) - A global equities rally pushed Japan's Nikkei to a more than three-decade high and U.S. stock benchmarks to new records on Friday, while safe havens such as Treasuries and gold sold off as investors looked past U.S. political unrest and focused on further stimulus to mend the economic damage of the coronavirus pandemic.

Risky assets, including oil, emerging market stocks and bitcoin, jumped, while a sell-off in 10-year U.S. Treasuries pushed their yields to the highest levels since March.

The surge came despite data from the Labor Department that showed the U.S. economy shed 140,000 jobs in December, the first time that payrolls decreased in eight months. Yet investors expect that President-elect Joe Biden's incoming administration will pass bigger fiscal stimulus and infrastructure spending plans.

"The economic reality stands in stark contrast to the markets' view of the world – we are all living in the present, with a badly damaged economy, while the market is living in the future, expecting a post-COVID or at least post-vaccine world," said Chris Zaccarelli, chief investment officer for Independent Advisor Alliance.

MSCI's gauge of stocks across the globe gained 0.84%% following broad gains in Asia and Europe, lifting it to new records. The Nikkei hit its highest level since September, 1990.

On Wall Street, the Dow Jones Industrial Average rose 56.84 points, or 0.18%, to 31,097.97, the S&P 500 gained 20.89 points, or 0.55%, to 3,824.68 and the Nasdaq Composite added 134.50 points, or 1.03%, to 13,201.98.

"Investors are buying the end of an erratic Trump administration and looking forward to something new, which is a Biden presidency and the prospect of a significant spending program," said Francois Savary, chief investment officer at Swiss wealth manager Prime Partners.

Rising risk appetite weighed on bonds. Benchmark 10-year notes fell 12/32 in price to yield 1.1119%, from 1.071% late on Thursday.

The dollar index rose 0.267%, with the euro down 0.38% to $1.2223.

Cryptocurrency bitcoin pared gains after hitting another all-time high, dropping 1.6% on the day. Market watchers have said a pullback is likely following its recent run-up.

In commodity markets, oil traders continued to focus on Saudi Arabia's pledge to deepen production cuts, pushing oil prices near 11-month highs.

U.S. crude rose 2.8% to end at $52.24 per barrel and Brent settled at $55.99, up 3% on the day.

Spot gold dropped 3.4% to $1,847.15 an ounce.

(Reporting by David Randall; Editing by Steve Orlofsky, Dan Grebler, Cynthia Osterman and Marguerita Choy)