Pound hits 33-month high over $1.39 as Covid vaccine optimism lifts markets – business live

Commodity prices are also rallying hard today, on expectations of higher demand as the global economy rebounds from the pandemic.

Tin has hit a seven year high, which the Financial Times attributes to a “manufacturing-driven buying frenzy” that has drained physical stocks of the commodity.

The dark grey metal, usually associated with cans, has become a key material for the global electronics industry. It is used to make solder — the substance that binds together circuit boards and wiring.

The shift to working from home has boosted demand for computers and other electronic devices, while China has also been stockpiling the metal to meet its goal of self-sufficiency in semiconductors, according to traders.

More here: Tin-buying frenzy sends prices to seven-year high

Copper has hit its highest level since 2012, trading as high as touching $8,406 per tonne, amid predictions of rising inflation and stronger than expected demand from China’s factories, according to Reuters.

These higher commodity prices could, one assumes, force factories to put up their own prices – ultimately leading to higher costs in the shops….

The US dollar has dipped broadly in the markets, hitting a two-week low against a basket of currencies.

Optimism about COVID-19 vaccine rollouts, and the prospect of more US stimulus measures, pushed investors into riskier assets and out of the dollar.

Analysts at MUFG predict further dollar weakness ahead, which indicates the pound could have further to rally.

“We believe there is plenty yet to go in the so-called ‘reflation trade’ with market participants under-estimating the willingness of global policymakers to let the economy run hot and fuel stronger-than-expected global growth through the remainder of the year.

Here’s our news story on Jaguar Land Rover’s electric car push:

At $1.39 against the US dollar, the pound is still rather weaker than before the Brexit vote in 2016 – when it was worth almost $1.50.

But Paul Dales of Capital Economics argues that sterling could close that gap and rally to $1.45 this year, as the threat of negative interest rates diminishes.

He believes improving global risk sentiment should also boost the stock market, telling clients:

UK assets are well placed to shake off their underperformance since the 2016 Brexit vote by outperforming global assets over the next couple of years. All risky assets will continue to be buoyed by the combination of a rapid global economic recovery from the COVID-19 crisis and global central banks running ultra-loose policy for many more years.

But the UK’s more favourable valuations and its greater exposure to the sectors that are likely to benefit most from the recovery, such as consumer-facing, energy and financial, suggests that equities in the UK will rebound more rapidly than elsewhere.

Overnight, mortgage lender Halifax has reported that demand for detached houses in the UK has boomed during the coronavirus pandemic.

Buyers paid an average price of £486,595 for a detached property in December, 10% more than in December 2019, amid a scramble for more space to make home-working and schooling easier.

The pound’s rally comes on the 50th anniversary of decimalisation.

That was the day when the UK abandoned the complicated mix of tanners, shillings and florins in favour of today’s simpler system based on 100 pennies in the pound.

The new 1/2p, 1p, 2p, 5p, 10p and 50p coins were designed by sculptor Christopher Ironside, whose daughter Kate has written a fascinating thread about the process:

After three hours trading, the UK’s FTSE 100 is solidly higher – up 90 points at 6679 points, its best level in almost three weeks.

Oil producers and miners continue to lead the rally, along with UK retailers (JD Sports are up almost 5%) and hospitality firms, on hopes of an economic revival this year.

Over in Paris, French bank BNP Paribas has announced a new policy to fight deforestation in the Amazon.

It means France’s largest bank will not provide financial support to firms who produce, or buy, beef or soybeans from land in the Amazon that was cleared or converted after 2008.

Outlining the policy, BNP Paribas says:

Beef and soybean production in Brazil accelerates deforestation in the Amazon and the Cerrado. Whether legal or illegal, it jeopardises the ecological integrity and future of these two biomes.

Faced with this degradation, there is an urgent need for all relevant stakeholders to prioritise land use strategies that integrate zero deforestation, sustainable production and a positive social impact.

The new policy means:

• BNP Paribas will not finance customers producing or buying beef or soybeans from land cleared or converted after 2008 in the Amazon. Clients must therefore apply this cut-off date, which had been set at 2008 in the Amazon, in accordance with regulations and sector agreements.
• BNP Paribas will encourage its clients not to produce or buy beef or soybeans from cleared or converted land in the Cerrado after 1 January 2020, in line with global standards.
• For all its customers, BNP Paribas will require full traceability of beef and soy (direct and indirect) channels by 2025.

More here: BNP Paribas defines a restrictive policy to fight deforestation in the Amazon and the Cerrado regions

Environmental scientists have warned that the rise of cattle farming, palm oil production and mining in the Amazon poses a huge risk to the rainforest’s hydrological cycle will be “in tatters”, which could lead to severe disruption of global weather systems.

Last month, BNP Paribas, Credit Suisse and ING pledged to stop financing trade in crude oil from Ecuador after pressure from campaigners aiming to protect the Amazon rainforest.

The eurozone has recorded its largest goods trade surplus since the currency block was created over 20 years ago.

The eurozone’s trade in goods surplus with the rest of the world swelled to €27.5bn on a seasonally-adjusted basis in December, up from €24.9bn in November.

That’s the largest seasonally-adjusted surplus recorded over the period for which data are available (1999-2020), data provider eurostat reports.

Ignoring seasonal adjustments, the eurozone goods trade surplus rose to €29.2bn in December 2020, compared with +€22.6bn in December 2019.

With the world economy gripped by the pandemic, eurozone imports and exports both fell sharply last year – with the trade surplus over the year widening.

Eurostat explains:

In January to December 2020, euro area exports of goods to the rest of the world fell to €2 131.4bn (a decrease of 9.2% compared with January-December 2019), and imports fell to €1 897.0bn (a decrease of 10.8% compared with January-December 2019).

As a result the euro area recorded a surplus of €234.5 bn, compared with +€221.0 bn in January-December 2019.

Europe’s factories ended 2020 on a rather low note, with output shrinking by more than expected.

Industrial production across the eurozone fell by 1.6% in December, and by 1.2% in the wider EU.

Production of capital goods fell by 3.1%, showing weaker demand for physical assets like buildings, machinery, equipment, vehicles, and tools. Production of non-durable consumer goods fell by 0.6%.

On the upside, production of durable consumer goods rose by 0.8%, intermediate goods by 1.0% and energy by 1.4%, eurostat reports.

That wrapped up a dismal year; annual average industrial production for 2020, compared with 2019, fell by 8.7% in the euro area and by 8.0% in the EU.