LONDON / SYDNEY (Reuters) – Global equities rose for the ninth straight day on Thursday, just after record highs as investors digested recent gains, while stocks were held back by the promise of more free money after trading. a benign report on U.S. inflation and a federal guarantee Reserve forecast.
European stocks opened higher, with the STOXX 600 and FTSE 100 in London up 0.3%. This was followed by a moderate Asian session, as the markets in China, Japan, South Korea and Taiwan were closed for holidays.
MSCI’s broader Asia-Pacific stock index outside of Japan added 0.1% as it rose for four sessions to gain more than 10% so far this year.
Investors were also pondering the first phone call between U.S. President Joe Biden and his Chinese counterpart, Xi Jinping, where Biden said a free and open Indo-Pacific was a priority and that Xi’s alert confrontation it would be a “disaster” for both nations.
With Chinese markets closed, there was little reaction to news that the Biden administration will consider adding “new specific restrictions” to certain exports of sensitive technology to China and that it would maintain tariffs for now.
S&P 500 futures were up 0.2% after hitting record highs on Wednesday.
The MSCI global equity index, which tracks the shares of 49 countries, was 0.1% higher. This was not far from the peaks reached the day before and only maintained a nine-day earnings streak, the first since October 2017.
“History really remains American equities,” said James Athey, chief investment officer of Aberdeen Standard Investments. “The earnings season has been especially strong in the United States, the fiscal stimulus of the Biden administration is growing in the market mind and most of the big winners of the pandemic appear in the United States.
“Only the Fed can shake the ship, and with yesterday’s disappointing inflation impression, that outlook has just slipped even further into the future.”
Prospects for more global stimulus gained a big boost overnight thanks to a surprisingly soft reading of US core inflation, which eased to 1.4% in January.
Federal Reserve Chairman Jerome Powell said he wanted inflation to reach 2% or more even before he thought about reducing the bank’s super easy policies.
In particular, Powell stressed that once the effects of the pandemic were eliminated, unemployment was closer to 10% than the reported 6.3% and therefore far from full employment.
As a result, Powell called for a “society-wide commitment” to reduce unemployment, which analysts considered strong support for President Joe Biden’s $ 1.9 trillion stimulus package.
Westpac economist Elliot Clarke estimated that more than $ 5 trillion in accumulated stimulus, worth 23% of GDP, would be required to repair the damage caused by the pandemic.
“Financial conditions are expected to continue to give strong support to the US economy and global financial markets in 2021 and probably until 2022,” he said.
The mix of bottomless Fed funds and a mild inflation report encouraged bond markets, leaving ten-year yields at 1.14%, down 1.20% in early week.
Italian bond yields remained close to recent lows ahead of a long-term bond auction and as Mario Draghi was expected to present his new governing coalition in the coming days. BTP yields or 10-year government bonds in Italy fell one basis point, to 0.490%, almost the lowest since early January.
Following the Fed’s U.S. and Powell inflation report, which reiterated that rates could remain lower for longer, the U.S. dollar fell before balancing during European trade . The dollar index was flat at 90,438, far from a ten-week limit of 91,600 touched at the end of last week.
Gold rose 0.1% to $ 1,845.26 an ounce as investors drove platinum to a six-year high in more demand bets from carmakers. [GOL/]
Oil prices fell, having enjoyed the longest winning streak in two years amid producer supply cuts and expects the deployment of vaccines will drive the recovery in demand. [O/R]
Brent crude futures fell 39 cents to $ 61.07. U.S. crude fell 36 cents to $ 58.31 a barrel.
Additional reports from David Henry in New York; edition of Lincoln Feast, Sam Holmes, Larry King