* MSCI world equity index hits new record high
* US dollar near 10-week low; Aussie, yuan supported
* Oil prices top $40 a barrel
* Markets trade on Biden win and Republican senate
* Graphic: 2020 asset performance http://tmsnrt.rs/2yaDPgn
* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh
MILAN/SYDNEY, Nov 9 (Reuters) - World stocks hit a record
high on Monday and the dollar stayed weak as expectations of
better global trade ties and more monetary stimulus under U.S.
President-elect Joe Biden supported risk appetite.
Markets started to trade on the prospect of a Biden
presidency and a Republican-controlled U.S. Senate last week,
but the Democratic candidate's projected victory on Saturday
gave more fuel to the move.
The MSCI world equity index < .MIWD00000PUS>, which tracks
shares in 49 countries, rose 0.5% to a record high in early
European hours. On Friday, it posted its biggest one-week gain
in nearly seven months.
E-mini futures for the S&P 500 jumped more than 1.4%
on Monday. Nasdaq futures rallied more than 2% to just
under a record high, signalling a positive start for U.S.
MSCI's broadest index of Asia Pacific shares outside of
Japan jumped 1.3% after hitting its highest
since January 2018. The pan-Europe STOXX 600 climbed
1.5% to one-month highs by 0846 GMT.
"Why the excitement? Hopes of less diplomatic and trade
angst, a lower dollar helps global rebalancing," Chris Bailey,
European strategist at Raymond James in London said in a note.
"A lot of hope... but over two months until inauguration day!"
Equities rallied last week, with the S&P 500 up 7.3%,
clocking the best gain in an election week since 1932, according
to National Australia Bank analyst Tapas Strickland.
Investors expect Republicans to maintain control of the
Senate, making it harder for a Biden administration to push
through major policy changes, from a planned tax hike to a big
fiscal stimulus package.
That would mean better earnings prospects for companies
exposed to the world's largest economy but also that the U.S.
Federal Reserve might have to step in to further ease monetary
conditions and support a pandemic-hit economy.
The United States saw a record number of new coronavirus
infections last week, with the total number of cases nearing 10
Matt Sherwood of Australian fund manager Perpetual, however,
said Biden's win did not necessarily warrant a tweaking of his
"In the end, we think the U.S. economy is still fairly
fragile and growth's slowing down," Sherwood said.
"You could potentially gravitate your portfolio more towards
higher-beta type markets, such as emerging markets, and there
is potential for better prospects in the energy space than would
have been the case with a Democrat clean sweep."
Oil prices jumped on Monday as investors greeted the
prospect of a Biden victory, shrugging off worries about
lacklustre demand amid rising global coronavirus cases.
Brent crude added nearly $1 to $40.35.
Analysts said the outlook might get tougher from here as
investors focus on Biden's ability to expand fiscal stimulus and
measures to reduce the spread of COVID-19.
U.S.-based wealth manager Jim Wilding at Confluence
Financial Partners in Pennsylvania added a word of caution
considering the S&P 500 is not far from record highs and
equity valuations are generally at heady levels.
"While we remain positive over the intermediate-term outlook
and believe divided government reduces the chances of a bear
case scenario playing out, we would refrain from unbridled
enthusiasm at current levels," he said.
Expectations that monetary policy in the U.S. will remain
easy and global trade relations improve has weakened the dollar
in recent days. It posted its biggest weekly loss in more than
seven months on Friday.
The dollar index was just above its lowest in around
10 weeks, up 0.1%, while growth and trade proxies such as the
Australian dollar and the Chinese yuan remained in demand. The
Aussie reached a seven-week high, up 0.4%, and China's
yuan struck a 28-month high.
The euro, which climbed 1.9% last week, was
unchanged. Sterling was also flat as the focus turned to
Brexit trade negotiations coming to a head with the EU summit on
(Reporting by Danilo Masoni in Milan and Swati Pandey in
Sydney, editing by Larry King)