TOKYO (Reuters) – Global stocks traded near record highs on Friday, with Asian stocks taking the lead on Wall Street, as progress in vaccine distribution prompted bets on a normalization of the global economy and recovery of profits.
An index of the 50 most important markets in the world, MSCI ACWI, rose 0.2% to 667.90, reaching a record high of 670.82 touched about two weeks ago. It was the fifth consecutive day of earnings.
European equities are expected to open firmly, with euro stoxx futures up 0.3% in early trading, while British FTSE futures were flat.
The value of MSCI’s Asian shares outside Japan rose 0.6%, while the Japanese Nikkei rose 1.5%.
On Wall Street, each of the major indices rose more than 1% on Thursday, with the Nasdaq Composite Index and the S&P 500 hitting highs.
“What drives the market is that corporate profits are on a strong recovery,” said Jumpei Tanaka, Pictet’s strategist.
“And there are piles of money saved in money market funds (MMFs) and elsewhere that are likely to be invested in stocks once the economy normalizes as vaccination programs progress.”
(GRAPH: profit recovery -)
Expectations of strong stimulus from the administration of U.S. President Joe Biden also supported the risk sentiment, while better-than-expected data on U.S. labor markets published in the U.S. last two days a bullish mood is advancing ahead of the payroll report to be released at 13:30 GMT.
The long-term yields on the US Treasury rose in anticipation of a large Washington pandemic relief bill, as well as on rising inflation expectations.
The benchmark 10-year yield stood at 1.137%, after rising to a three-week high of 1.162% the day before, while 30-year bonds fell 1.931%. close to its maximum of 10 and a half months (1.951%). .
Bond yields also rose in Europe, with the yield on 30-year German government bonds rising again to positive territory for the first time since September.
A market indicator of future US inflation peaked since October 2018, while that of the eurozone peaked since May 2019.
In the foreign exchange market, the dollar strengthened against most of its peers as traders ’focus shifted toward the relative strength of U.S. growth.
Until recent weeks, the dollar had been sold as expected that a global economic recovery would favor fund outflows towards riskier currencies from the shelter dollar.
The US dollar index was close to a two-month high, after rising by 1.1% so far this week, with the aim of its largest weekly increase since the end. of October.
The euro changed hands at $ 1.1964, after hitting a two-month low of $ 1.1952, while the yen hit a three-and-a-half-month low of $ 105.70 per dollar.
“It looks like the markets are now trying to negotiate with economic normalization based on progress in vaccination,” said Arihiro Nagata, CEO of global investments at Sumitomo Mitsui Bank.
“The fact that the only currencies that work better than the dollar in the last two days are the British pound and the Israeli shekel, the two countries that go further in vaccination, seems to back it up.”
The British pound stood at $ 1.3678 not far from its 2 1/2 year high of $ 1.3759 reached late last month.
The shekel has risen over the past two days, reversing its decline since mid-January after the Bank of Israel stepped in to curb the shekel’s strength after reaching a 24-year high.
The strength of the dollar pushed gold to a two-month low of $ 1,785.10 per ounce on Thursday. The metal was last traded at $ 1,797.40.
Oil expanded its gains due to an optimistic economic mood, falling inventories and OPEC + ‘s decision to continue its production cuts.
US crude rose 1% to $ 56.80 a barrel and Brent stood at $ 59.38, up 0.9%.
Additional reports by Imani Moise; Edited by Richard Chang, Christian Schmollinger and Ana Nicolaci da Costa