Global stocks rise with Biden stimulus in focus

Wall Street's main indices were in the black in midday trading, with the Dow adding 0.4 per cent

Global equity markets mostly advanced Thursday as investors awaited Joe Biden's plan for substantial new stimulus, and the US Federal Reserve's policy outlook.

Meanwhile, data showed that new applications for US unemployment benefits rose sharply in the first week of 2021 -- surging by 181,000 in the biggest increase since the coronavirus pandemic began in March -- in a clear demonstration that the economy is faltering.

"The key takeaway from the report for the market is that it simply paints the need for additional stimulus; hence, this bad news gets interpreted as good news," said market analyst Patrick J. O'Hare at Briefing.com.

In Europe, the London stock market closed with a gain of 0.8 per cent while Frankfurt rose by 0.4 per cent and Paris added 0.3 per cent.

Bitcoin gained for a third day, increasing by 13 per cent to around $39,700 on keen demand, but remained under the record $41,981 set on Friday.

The US dollar was mixed against other major currencies while oil fell.

"A more positive tone in markets has developed ahead of the expected stimulus announcement from Joe Biden," noted Chris Beauchamp, chief market analyst at trading firm IG.

"Investors (are) hoping that the president-elect will move quickly and in substantial form to secure a new package that will bolster the US economy as the vaccine programme moves into a higher gear," he added.

News that Donald Trump had been impeached for a historic second time appeared to have little immediate impact on sentiment, despite worries about more unrest ahead of Biden's inauguration on January 20.

Hopes for another huge spending splurge in the world's top economy overshadowed fears about surging virus cases -- and record daily deaths in the US and Britain -- that have forced governments to impose new lockdowns.

Analysts said a drug being developed by pharma giant Johnson & Johnson could make a huge difference as it would only need one jab and can be transported more easily.

But for now, the focus is on the US president-elect's new economic rescue plan, which could be in the trillions of dollars and include a push for $2,000 cash handouts.

Traders were soothed meanwhile by comments from top Fed officials indicating they did not support winding down the bank's enormous monetary easing programme any time soon.

Fed boss Jerome Powell's comments later Thursday will be pored over for clues to policy direction in light of Biden's spending plan, which most observers think will drive inflation higher, and in turn interest rate expectations.

The central bank's gigantic bond-buying scheme and easy-money policies have underpinned financial markets' recovery from their March troughs.