Stocks stall, sterling slips as new COVID strain UK By Reuters closes

© 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

By Wayne Cole

SYDNEY (Reuters) – Asian stocks stalled on Monday and the pound sterling slipped as uneasiness over a new strain of coronavirus shutting down much of the UK broke news that a deal on a long-awaited U.S. Stimulus package had been closed.

The pound fell 1.2% to $ 1.3352 after several European countries closed their borders with the UK as the country entered a tougher lockdown to fight 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.

This went hand in hand with the lack of a Brexit deal to reduce futures by 1.1%, while EUROSTOXX 50 futures lost 1.7%.

MSCI’s broadest index for stocks in the Asia-Pacific region outside Japan fell 0.2% after hitting a series of record highs last week. returned early gains 0.4%, their highest level since April 1991.

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 futures for the jump which then fell to a 0.2% loss as the session progressed.

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 expanding 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 many moves again overstretched the positioning, giving the currency some respite 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 value was set at 90.453, no longer at last week’s low of 89.723, which was the lowest since April 2018.

The euro also fell to $ 1.2190 while the dollar was stable against the yen at 103.36.

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

In general risk sentiment, the price of gold rose 0.8% to $ 1,895 an ounce.

Oil prices were hit with profit taking for seven straight weeks, with travel restrictions in Europe adding another blow to demand.

fell $ 1.57 to $ 47.53 a barrel while futures fell $ 1.65 to $ 50.61.

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