Pedestrians pass in front of electric quotation boards flashing the Nikkei index of the Tokyo Stock Exchange and the current exchange rate of the yen against dollar in Tokyo.
London: World stocks hit an all time high yesterday as the latest round of robust global data matched hopes that major economies like the United States will soon be serving up large helpings of fiscal stimulus.
MSCI’s All Country World index, spanning 46 countries, nursed the milestone as a record high Wall Street readied to reopen and Asia and Europe had consolidated the rough 10 percent gains both have made since December. There were surges in exports from Indonesia and Taiwan and falls in unemployment in Europe from Sweden to the Netherlands.
Another reason for the upbeat mood has been that, unlike in recent years, the prospect of US interest rate rises - which tend to set the bar for global borrowing costs - does not seem to be spooking markets.
The dollar is still down for the year despite a strong run over the last couple of weeks, while Treasury yields , have barely risen, which has helped propel emerging market bonds, stocks and many currencies higher.
The dollar hit the brakes again yesterday as the glow of the previous day’s upbeat data faded. US government bond yields eased too, taking German Bunds and Europe’s other benchmarks with them.
Upcoming elections in the Netherlands, France, Germany and possibly Italy, have kept investors interested in “safe” government bonds particularly with anti-euro and anti-EU sentiment on the increase throughout the continent.
The euro saw a brief tremble but then recovered to where it had been beforehand at $1.0645. It was also flat against Britain’s sterling.
US stocks futures pointed a slight pull back from the record high Wall Street later, though they were already digesting a flurry of data from jobless claims figures to a batch of Philly Fed economic surveys.
Industrial bellwether copper, which has surged 30 percent since late October, eased however to $6,028 a tonne after China’s overseas investment weakened. China is the world’s top copper user, but prices were supported by the prospect of supply disruptions in Chile and Indonesia.
The mildly weaker metals prices meant European shares couldn’t quite hold their ground either despite the sentiment boost from the new record high in global stocks.
The region’s STOXX 600 index was 0.3 percent lower by 10:00 GMT but this year’s rally has been underpinned by the fact European company earnings are expected to grow 14 percent this year, according to Thomson Reuters data.
Asia had no such problems overnight. MSCI’s main Asia index rose 0.2 percent to its highest since July 2015 after Wall Street had again pushed relentlessly into record-high territory.
Some investors said markets were looking slightly overvalued from a technical perspective after the bounce in recent weeks. For example, on a relative strength index (RSI), the MSCI Asia-ex Japan index was at its most overbought since 2015.
Analysts at Bank of America Merrill Lynch have regularly been warning since the start of the year of an “Icarus trade” where there is “one last melt-up in risky assets” before the ground rushes up.
