LONDON (Reuters) – World equities hit a record high on Tuesday, backed by strong economic data from China and the United States, while currency and bond markets took a breather after a month of rapid gains in dollar and treasury yields.
Shares, measured by the 49 countries that include MSCI All Country World Index, peaked when European equities rose overnight in Asia and Wall Street overnight in the first trading session since the Easter holidays.
The pan-European STOXX 600 index reached a record high after opening in Europe.[.EU]
Profit-taking dropped the Japanese Nikkei by 1% and dragged the Shanghai Composite.
The S&P 500 closed at a record high on Monday and the futures market fell 0.2% on Tuesday. [.N]
On the heels of a U.S. collision report on Friday, March data showed service activity reached a record high. China’s services sector also received steam with the sharpest increase in sales in three months.
“We think investors should not be afraid to enter the market at all times,” said Mark Haefele, chief investment officer of UBS Global Wealth Management.
‘We recommend continuing the position of the reflection trade as the economic recovery accelerates – the data released on Friday showed that the US non-farm payroll rose by 916 000 in March, the biggest gain since August. ‘
Yields on the 10-year US Treasury fell to 1.7093%, while the US dollar largely missed a strong bounce of strong data, holding $ 1.1819 per euro a day after falling the strongest since mid-term March was.
Elsewhere, Swiss lender Credit Suisse wanted to draw a line under its exposure to the explosion of hedge fund Archegos Capital, announcing the debacle would cost it about $ 4.7 billion and two senior executives their jobs.
STABLE CONDITION
Steady treasury yields and the dollar follow a rise in the first quarter, with an 83 basis point rise in 10-year yields, the largest quarterly gain in a dozen years and a 3.6% rise in the dollar index – the sharpest since 2018.
“Bonds have now expired,” said Omkar Joshi, portfolio manager at Opal Capital Management in Sydney, after a hard and fast sell-out. “I think markets can continue from here.”
Minutes of the US Federal Reserve’s meeting in March, which takes place on Wednesday, are the next focus for the bond market, although it will not address the most recent data surprises, and the markets have far surpassed the Fed forecasts for years of low rates.
The futures of Fed funds rose next year with a rise, while the markets for euro dollars rose by December.
“What needs to be tested is how the Fed strengthens and reassures its flexible average inflation targeting policy,” said Vishnu Varathan, chief economist at Mizuho Bank in Singapore.
“The dollar’s move over the past few weeks reflects that markets are moving forward, despite what the Fed has said.”
Currencies were fairly quiet during the session in Asia and hung on small gains on the dollar. The Australian dollar traded at $ 0.7647 after the central bank was stable, as expected.
The yen was a fraction softer at 110.21 per dollar, while the sterling hit a two-and-a-half-week high of $ 1.3919. [FRX/]
The sound of the dollar helped oil prices recover losses suffered on Monday due to concerns that a new wave of COVID-19 infections in Europe and India could limit energy demand. [O/R]
Brent crude futures rose 1.4% to $ 62.98 a barrel, while US crude rose 1.5% to $ 59.56 a barrel. Gold rose 0.2% to $ 1,732 per ounce. [GOL/]
Reporting by Ritvik Carvalho; additional reporting by Thyagaraju Adinarayan in London; and Tom Westbrook in Singapore; Edited by Nick Macfie