LONDON (Reuters) – Global equities hit record highs on Tuesday, backed by strong economic data from China and the United States, as foreign exchange and bond markets took a breather after a month of quick dollar gains and Treasury yields.
Shares measured by the 49-country MSCI All Country World index hit a record high as European stocks rebounded with gains in Asia and Wall Street overnight in their first trading session since the Easter break.
The pan-European STOXX 600 index reached a record high after opening in Europe.[.EU]
Profits pushed Japan’s Nikkei down 1% and pulled Shanghai Composite.
The S&P 500 closed at a record high on Monday, and futures fell 0.2% on Tuesday. [.N]
Following a US job barrier report on Friday, March data showed that service activity had reached a record high. China’s services sector also gathered steam, with the strongest sales growth in the last three months.
“We believe that investors should not be afraid of entering the market at all times,” said Mark Haefele, Chief Investment Officer, UBS Global Wealth Management.
“We recommend continuing the position for reflation trade as the economic recovery becomes faster – data released on Friday shows that US non-farm payrolls rose 916,000 in March, the biggest gain since August. “
The 10-year US Treasury yield fell to 1.7093%, while the US dollar largely lost a big jump from strong data and remained at $ 1.1819 per euro per day after recorded the sharpest decline since mid-March.
Elsewhere, Swiss lender Credit Suisse has tried to draw a line under its exposure to the implosion of the Archegos Capital hedge fund, announcing that the disappointment will cost it about $ 4.7 billion and that two senior executives will be hired.
STEADY STATE
Treasury and dollar steady yields follow a higher rate in the first quarter, with an 83-point increase in 10-year yields, the highest quarterly gain in the last ten years and a 3.6% increase in the dollar index – the strongest of 2018.
“The bonds have now been settled,” said Omkar Joshi, portfolio manager at Opal Capital Management in Sydney, after a heavy and rapid sale. “I think markets can continue to start from here.”
The minutes of the March meeting of the US Federal Reserve, which will take place on Wednesday, are the next target for bond markets, although they will not address the latest data surprises, and the markets have far exceeded the Fed’s forecast of years of installments low.
Future Fed funds have prices rising next year, while Eurodollar markets have prices until December.
“What needs to be tested is how the Fed strengthens and ensures its flexible policy of the average inflation target,” said Vishnu Varathan, chief economist at Singapore’s Mizuho Bank.
“The last few weeks of the dollar move reflect the markets that are moving forward, despite what the Fed has said.”
The currencies were fairly quiet during the Asian session and clung to small dollar gains. The Australian dollar traded at $ 0.7647, after the central bank kept its policies in place, as expected.
The yen was down softer at $ 110.21, while the pound reached a two-and-a-half-week high of $ 1.3919. [FRX/]
The fluctuation of the dollar has helped oil prices recover some of the losses suffered on Monday, due to concerns about a new wave of COVID-19 infections in Europe and India that could reduce energy demand. [O/R]
In the long run, crude oil rose 1.4% to $ 62.98 a barrel, while US crude rose 1.5% to $ 59.56 a barrel. Gold reached 0.2% at $ 1,732 an ounce. [GOL/]
Reporting by Ritvik Carvalho; additional reporting by Thyagaraju Adinarayan in London; and Tom Westbrook in Singapore; Editing by Nick Macfie