TOKYO (Reuters) – Global equities traded near record highs on Friday, with Asian equities taking their lead on Wall Street as advances in the distribution of vaccines led to further normalization in the world economy and a recovery in earnings.
An index of the world’s largest 50 markets, MSCI ACWI, rose 0.2% to 667.90, reaching a record high of 670.82 about two weeks ago. This was the fifth consecutive day of profits.
European equities are expected to start solid, with the early-term stoxx futures contract up 0.3%, while the FTSE futures contract in Britain was smooth.
MSCI’s benchmark for Asian equities outside Japan rose 0.6%, while Japan’s Nikkei rose 1.5%.
On Wall Street, each of the major indices rose more than 1% on Thursday, with the Nasdaq Composite Index and S&P 500 reaching record highs.
“What drives the market is that corporate earnings are recovering strongly,” said Jumpei Tanaka, strategist at Pictet.
“And there are heaps of money being saved in MMFs (money market funds) and elsewhere, which are likely to be invested in equities as soon as the economy normalizes as the vaccination programs progress.”
(GRAPH: Recovery in earnings -)
The expectation of a major stimulus by the government of the US President, Joe Biden, also supported the risk sentiment, while better than expected data on the US labor markets released over the past two days provide a strong state of mind ahead of the payroll report which appears at 1330 GMT.
US Treasury long-term yields have risen in anticipation of a major Washington pandemic bill as well as raising inflation expectations.
The standard ten-year yield rose to 1.137% and rose to a three-week high of 1.162% the previous day, while the 30-year bond yielded 1.931%, near its highest 1 1/2 month of 1.951% which Thursday was affected. .
Bond yields have also risen in Europe, with the 30-year yield on government bonds in Germany for the first time since September.
A market gauge of future US inflation was at its highest since October 2018, while reaching the highest for the euro area since May 2019.
In the foreign exchange market, the dollar strengthened against most of its peers as the focus of traders shifted to the relative strength of US growth.
Until recent weeks, the dollar has been sold on the expectation that a global economic recovery will boost the outflow of funds to more risky currencies from the safe-haven dollar.
The US dollar index has risen nearly two-month highs and has risen 1.1% so far this week, on track for its biggest weekly rise since late October.
The euro changed hands from $ 1.1964 to a two-month low of $ 1,1952, while the yen hit a 3-1 / 2-month low of $ 105.70 per dollar.
“It looks like markets are now trying to trade economic normalization based on progress with vaccination,” said Arihiro Nagata, general manager of global investments at Sumitomo Mitsui Bank.
“The fact that the only currencies that have outperformed the dollar, the British pound and the Israeli shekel over the past two days is the two countries that are going to vaccinate further, seems to support this.”
The British pound stood at $ 1.3678, not far from its 2 1/2 year high of $ 1.3759 reached last month.
The shekel has risen over the past two days, reversing its decline since mid-January after the Bank of Israel intervened to strengthen the shekel after reaching a 24-year high.
Strength in 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 boosted profits with optimistic economic sentiment, declining inventories and OPEC +’s decision to stick to its production cuts.
US crude rose 1% to $ 56.80 a barrel and Brent rose $ 59.38, up 0.9%.
Additional reporting by Imani Moise; Edited by Richard Chang, Christian Schmollinger and Ana Nicolaci da Costa