LONDON v SYDNEY (Reuters) – Global equities rose on Thursday for the ninth straight day, near record highs as investors digested recent gains, while lips were backed by a promise to receive more free money after a benign US inflation report and a false federal report Book the outlook.
European stock markets opened more, with STOXX 600 and FTSE 100 in London up 0.3%. This was followed by a reduced Asian session as markets in China, Japan, South Korea and Taiwan were closed for the holidays.
The broader MSCI index of Asia-Pacific equities outside Japan added 0.1%, having already climbed for four sessions to gain over 10% so far this year.
Investors also reflected on the first phone call between US President Joe Biden and his Chinese counterpart Xi Jinping, where Biden said a free and open Indo-Pacific is a priority, and Xi’s warning confrontation will be a “disaster”. for both nations.
With the closure of Chinese markets, there has been little reaction to the news that the Biden administration will analyze by adding “new targeted restrictions” to certain sensitive technology exports to China and would maintain tariffs for the time being.
Futures for the S&P 500 were 0.2% higher after reaching all-time highs on Wednesday.
The MSCI Global Capital Index, which tracks stocks in 49 countries, was up 0.1%. This was not far from the peaks reached the day before and only supported a series of nine-day gains, a premiere in October 2017.
“The story is really still US stocks first,” said James Athey, chief investment officer at Aberdeen Standard Investments. “The earnings season has been particularly strong in the US, the fiscal stimulus from the Biden administration is growing in the minds of the market and most of the big winners of the pandemic are listed in the US.
“Only the Fed can change its boat, and with yesterday’s disappointing footprint, that prospect has just slipped even further into the future.”
The outlook for more global stimulus gained a major boost overnight from a surprisingly easy reading of US core inflation, which fell to 1.4% in January.
Federal Reserve Chairman Jerome Powell said he wants to see inflation reach 2 percent or more before even considering cutting the bank’s super-light policies.
In particular, Powell pointed out that once the effects of the pandemic were eliminated, unemployment was almost 10% compared to the reported 6.3% and therefore a long way from employment.
As a result, Powell called for a “society-wide commitment” to reduce unemployment, which analysts saw as strong support for President Joe Biden’s $ 1.9 trillion stimulus package.
Westpac economist Elliot Clarke estimated that more than $ 5 trillion in cumulative stimulus, worth 23 percent of GDP, would be needed to repair the damage caused by the pandemic.
“Financial conditions are expected to remain extremely favorable for the US economy and global financial markets in 2021 and probably until 2022,” he said.
The mix of bottomless Fed funds and a softened inflation report encouraged bond markets, leaving 10-year yields at 1.14%, down from a high of 1.20% earlier in the week.
Italian bond yields remained close to recent lows before a long-term auction, and Mario Draghi was expected to present his new governing coalition in the coming days. Italy’s 10-year BTP or government bond yield fell one basis point to 0.490%, close to its lowest level since early January.
Following the US report on inflation and the Fed’s Powell, which reiterated that rates could remain lower for longer, the US dollar slipped before stabilizing during European trading. The dollar index was flat at 90,438, far from a 10-week high of 91,600 reached at the end of last week.
Gold rose 0.1% to $ 1,845.26 an ounce as investors took platinum to a six-year high on bets with higher demand from carmakers. [GOL/]
Oil prices have fallen after enjoying the longest winning streak in two years amid declining producer supply, and hopes vaccine launches will lead to a recovery in demand. [O/R]
In the long run, gross brent fell 39 cents to $ 61.07. US crude fell 36 cents to $ 58.31 a barrel.
Additional reporting by David Henry in New York; edited by Lincoln Feast, Sam Holmes, Larry King