Equities cautiously welcome US stimulus, which is cautious on Brexit

© Reuters. FILE PHOTO: An investor puts his hands on the back of his head in front of an electronic board displaying stock information at a brokerage house in Hefei

Posted by Wayne Cole

SYDNEY (Reuters) – Asian stocks traded sideways in Asia on Monday as investors cautiously welcomed news that a deal on a long-awaited US stimulus package had been closed, despite "tough" Brexit talks dragging on and off an agreement was in sight.

The pound sterling fell 0.8% to $ 1.3408 after several European countries closed their borders with the UK as the country put a tougher lockdown to combat a new strain of coronavirus.

Prime Minister Boris Johnson will chair an emergency meeting on Monday to discuss international travel and the flow of goods to and from the UK.

In the United States, Senate Republican Majority Leader Mitch McConnell said Congress leaders had reached an agreement on a COVID-19 relief bill worth approximately $ 900 billion.

The news initially saw a future for the jump that flattened again as the morning wore on.

The broadest MSCI index for stocks in the Asia-Pacific region outside of Japan fluctuated after a series of record highs on both sides of the plane. rose by 0.5% to its highest level since April 1991.

BofA analysts found a whopping $ 46.4 billion poured into stocks last week, while the cash outflow was the largest in four months. There have been record flows in technology stocks and large inflows into consumer, healthcare, finance, real estate, and value stocks.

Michael Hartnett, BofA's chief investment strategist, said the "sell signal" was triggered for the first time since February, as cash levels fell to 4.0% in the latest Global Fund Manager survey.

"Positioning is getting too much as policy support and profits peak," he said in a note. "Expectations for higher growth, inflation and lower interest rates have become a consensus, and investors are positioning themselves for a very rosy, low volatility, high growth scenario."

A busy trade

Another popular trade was the short selling of the US dollar and positioning again appeared to be overwhelmed by much action, giving the currency some rest on Monday.

"The foreign exchange markets are waiting for the final results of a possible Brexit deal and a US fiscal package," said Ned Rumpeltin, European head of foreign exchange strategy at TD Securities.

"We remain biased when it comes to dismissing the good news on both fronts. These factors appear to be fully valued and short USD trading seems increasingly crowded."

The increase rose a little to 90,147 and away from last week's low of 89,723, which was the lowest since April 2018.

The euro also fell to $ 1.2216 while the dollar was slightly firmer against the yen at 103.45.

The dollar was also raised by a Nikkei report Japanese Prime Minister Yoshihide Suga told Treasury officials in November to ensure the dollar does not drop below 100 yen.

During the pause in the dollar's decline, gold prices saved a small fraction of their recent gains at $ 1,883 an ounce.

Oil prices have been profit-taking after seven consecutive weeks of profit, with travel restrictions in Europe adding another blow to demand.

Cut 79 cents to $ 48.31 a barrel, while futures fell 70 cents to $ 51.56.

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