LONDON: World shares were within touching distance of an all-time high on Monday, spurred on by the combination of record low global interest rates and the improving health of major economies.
European markets opened on the front foot again, looking for their 10th straight week of gains after last week’s bumper set of easing measures from the European Central Bank. .EU
Asian stocks earlier touched their highest levels in nearly three years while Wall Street notched another record close on Friday following bright U.S. jobs data.
MSCI’s All-World share index .MIWD00000PUS, which encompasses 45 countries and is generally seen as benchmark of global stocks, was up 0.15 percent at 427.11 points, just below its 2007 pre-financial crisis peak of 428.63 points.
“We got more confirmation last week (from the ECB) that policy is going to remain very loose for a long time,” said Peter Sullivan, HSBC’s head of equity strategy in Europe.
“In the U.S. it’s clear that earnings are coming back pretty strongly and there are even signs of life now in Europe… So you put that together and it’s certainly more likely that equities rise rather than fall from here.”
Trading was thinner than usual due to public holidays in a handful of countries including Germany and France, but the strong appetite for risk in the region was hard to miss.
Spanish and Italian bond yields ES10YT=TWEB IT10YT=TWEB, a proxy for what their governments pay to borrow on financial markets, were at all-time lows with Spain enjoying lower yields than the United States. US10YT=RR.
Emerging markets were also performing strongly with stocks .MSCIEF on the cusp of a 1-year high and a number of key currencies on the rise.
The South Korean won KRW=KFTC touched a near six-year peak although intervention by the foreign exchange authorities capped its upside, while Malaysia’s ringgit MYR=MY hit a near seven-month high. EMRG/FRX
Among major currencies, the dollar .DXY continued to benefit from rising U.S. Treasury yields, after U.S. jobs data on Friday showed employment back at its pre-recession level. (Full Story)
Weekend trade data from China also supported the view of a recovering global economy, with exports gaining steam last month. But the same data also contained some cause for concern, as a surprising drop in imports could herald weaker domestic demand. (Full Story)
China’s yuan rose after the People’s Bank of China unexpectedly fixed its daily midpoint higher against the dollar for the second straight session, which in turn also gave a lift to other Asian currencies. (Full Story)
RISING U.S. YIELDS HELP DOLLAR
The yield on benchmark 10-year Treasuries US10YT=RR stood at 2.6076 percent, up from Friday’s U.S. close of 2.597 percent and well above 11-month lows plumbed last month.
“The yield on 10-year U.S. Treasuries may need to sustain a move back above (the) 2.6 percent area to increase the likelihood of the greenback move through the 102.80 level against the yen,” Marc Chandler, global head of currency strategy at Brown Brothers Harriman, said in a note to clients.
For now, the dollar had to be content with a slight gain on the day to buy 102.44 yen JPY=, getting some help early in the Asian session from Japanese current account data which saw a lower-than-expected surplus in April.
In commodities, U.S. crude CLc1 and Brent oil LCOc1 gained about 0.3 and 0.2 percent to $103.02 and $108.83 a barrel respectively, underpinned by the solid jobs report that in theory should translate to higher oil demand.
Spot gold XAU= was steady on the day at $1,252.95 an ounce, while Shanghai copper fell to its lowest in nearly a month and London copper also dropped, unsettled by concern that a probe into metals storage at China’s third-largest port could squeeze financing and buying in metals.