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Global stock markets pull back after record run
Wall Street's leading indices pushed further into previously uncharted highs during trading on Tuesday, but ended up closing lower.
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Traders work on the floor of the New York Stock Exchange (NYSE) in New York in this file photo. (Reuters/Jeenah Moon)
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rofit-taking set in Tuesday on both sides of the Atlantic as stocks retreated after a run in record territory fueled by United States stimulus and the Brexit deal.
Wall Street's leading indices pushed further into previously uncharted highs during trading on Tuesday, but ended up closing lower.
Investor sentiment had received a shot in the arm the day before after US President Donald Trump signed a US$900 billion COVID-19 economic stimulus bill, setting up a trifecta of record closes.
Trump had held off signing the US virus stimulus package for almost a week, calling for cash payments to be jacked up to $2,000 from the $600 maximum offered in the initial bill.
Democrats agreed and on Monday the House of Representatives approved a motion to increase the payments.
But the Senate's Republican majority rejected the move, and buoyant stocks retreated, with the broad S&P 500 losing 0.2 percent and the tech rich Nasdaq down 0.4 percent.
"Even if the effort for bigger checks fails now, the goal posts have been moved and the Biden administration will have a better chance of passing additional stimulus once he is inaugurated," said OANDA market analyst Edward Moya.
Frankfurt's DAX index also powered its way Tuesday to new heights, but it ended the day down 0.2 percent.
Brexit deal helps markets
Meanwhile, British stocks surged, with investors relieved over the long-awaited Brexit deal with the European Union, with London's benchmark FTSE 100 index jumping 1.6 percent.
Britain and the European Union finally struck the trade deal Thursday to cushion the economic blow of Brexit, in a major boost to Conservative Prime Minister Boris Johnson.
The pound climbed against the dollar and the euro, as dealers continued to digest the 1,246-page agreement document.
"The Brexit deal is really a blessing... for the UK and for the FTSE 100 index," AvaTrade analyst Naeem Aslam told AFP.
"European stocks are still very much in Santa rally mode and traders only want to push stocks higher because they know that there is enough tailwind for the stock market in 2021."
The EU gave the green light to the deal on Monday, paving the way for it to come into effect in the New Year. Britain's parliament will seek to ratify it this week.
"Markets seem to be welcoming the Brexit deal," noted AJ Bell investment director Russ Mould.
"However, the agreement struck between London and Brussels is yet to win universal acclaim -- even if that is the inevitable result of the compromises that the Prime Minister had to make to get the deal over the line."
