NEW YORK: World stocks edged back from record highs on Wednesday as Wall Street bumped up against underwhelming economic data, while oil continued to rise and the dollar weakened ahead of comments from the Federal Reserve.

The US dollar has lost some of its safe-haven luster as traders turn to riskier assets, including some funded in other currencies, following positive news about a Covid-19 vaccine and a seemingly normalising US transition of power.

Former Fed Chair Janet Yellen’s reported nomination to Treasury Secretary has emboldened those risk bets and further weighed on the dollar.

“From here, the Fed will prove a mere auxiliary to maximise fiscal impact by ensuring cheap funding,” said John Hardy, head of FX strategy at Saxo Bank.

“The long-term implications of the Yellen nomination are distinctly dollar negative.” Minutes from the most recent Fed meeting are due later in the session.

The dollar index fell 0.076pc, with the euro up 0.14pc to $1.1905.

The Japanese yen strengthened 0.13pc versus the greenback to 104.31 per dollar, while sterling was last trading at $1.3363, up 0.05pc on the day.

On Wall Street, a surprise jump in weekly jobless claims added to signs the recovery in the labor market was stalling as the United States battled a new wave of Covid-19 infections.

MSCI’s broadest gauge of world stocks was last trading down 0.12pc, after renewed demand for shares earlier pushed it to a record high of 622.12.

The rally in global stocks is set to continue for at least six months, a Reuters poll forecast on Wednesday.

But on Wednesday the Dow Jones Industrial Average fell 141.76 points, or 0.47pc, to 29,904.48, the S&P 500 lost 11.17 points, or 0.31pc, to 3,624.24 and the Nasdaq Composite added 3.45 points, or 0.03pc, to 12,040.23.

“The question is, who wins the battle: the vaccines, or the rising cases in the short term?” said Christopher C. Grisanti, chief equity strategist at MAI Capital Management.

On Wednesday the pan-European STOXX 600 index lost 0.09pc while Japan’s Nikkei rose 0.50pc after touching a 29-year high.

MSCI’s broadest index of Asia-Pacific shares outside Japan closed 0.59pc lower, with Chinese shares capped by worries about rising debt defaults.

Oil continued to rise beyond pre-pandemic levels on bets for a speedy recovery in energy demand.

“Crude oil prices are trading at their highest levels since early March, supported by positive market sentiment as a result of vaccine news and strong oil demand in Asia,” said UBS oil analyst Giovanni Staunovo.

Published in Dawn, November 26th, 2020