TOKYO (Reuters) – Global equities traded near record highs on Friday, with Asian stocks leading Wall Street as advances in vaccine distribution spurred bets on further normalization of the global economy and a recovery in earnings.
An index of the world’s top 50 markets, MSCI ACWI, rose 0.2% to 667.90 and came within the range of a record high of 670.82 reached about two weeks ago. It was the fifth consecutive day of winning.
European equities are expected to open firmly, with Eurostoxx futures up 0.3% in early trading, while UK FTSE futures were flat.
The MSCI gauge for Asian stocks outside of Japan rose 0.6%, while the Japanese 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 setting record highs.
“What drives the market is that corporate earnings are showing a strong recovery,” said Jumpei Tanaka, strategist at Pictet.
“And there are tons of money saved in MMF (money market funds) and elsewhere that are likely to be invested in stocks once the economy normalizes as vaccination programs progress.”
(GRAPH: Recovery of income -)
Expectations of a major boost from US President Joe Biden’s administration also supported risk sentiment, while better-than-expected US job market data released in the past two days fueled an optimistic mood ahead of the payroll report due at 1330 GMT. are expected.
Longer-term yields on US Treasuries rose in anticipation of a major pandemic bill from Washington and also due to higher inflation expectations.
The 10-year benchmark return was 1.137%, up to a three-week high of 1.162% the previous day, while 30-year bonds returned 1.931%, near the 10 1/2 month high of 1.951% that Thursday was reached. .
Bond yields also rose in Europe, with returns on 30-year German government bonds returning positive for the first time since September.
A market measure of future US inflation was the highest since October 2018, while that for the eurozone reached its highest since May 2019.
In the foreign exchange market, the dollar strengthened against most of its counterparts as the focus of traders shifted to the relative strength of US growth.
Until recent weeks, the dollar has been sold in the expectation that a global economic recovery will encourage the outflow of funds to riskier currencies from the safe-haven dollar.
The US dollar index was near a two-month high and is up 1.1% so far this week, heading for its largest weekly gain since late October.
The euro changed hands at $ 1.1964 after hitting a two-month low of $ 1.1952, while the yen reached a 3-1 / 2-month low of 105.70 per dollar.
“It appears that the markets are now trying to act on economic normalization based on advances in vaccination,” said Arihiro Nagata, general manager of global investments at Sumitomo Mitsui Bank.
“The fact that the only currencies that have outperformed the dollar in the past two days are the British pound and the Israeli shekel, the two countries that are moving forward with vaccination, seems to support that.”
The British pound was at $ 1.3678, not far from the 2 1/2 year high of $ 1.3759 late last month.
The shekel rose for the past two days, reversing its decline since mid-January, after the Bank of Israel intervened to stem the shekel’s strength after it hit a 24-year high.
The strength of the dollar pushed gold to its two-month low of $ 1,785.10 an ounce on Thursday. The metal last traded at $ 1,797.40.
Oil expanded its gains on the back of positive economic sentiment, falling inventories and OPEC + ‘s decision to stick to the production cuts.
US crude oil was up 1% to $ 56.80 a barrel and Brent was at $ 59.38, up 0.9%.
Additional reporting by Imani Moise; Edited by Richard Chang, Christian Schmollinger and Ana Nicolaci da Costa