Global stocks were near record highs on Friday after strong US and Chinese economic data bolstered expectations of a solid global recovery from the coronavirus-induced slump.
European equities are expected to rise, with Euro Stoxx futures at 0.1% and UK FTSE futures slightly higher.
MSCI’s widest index of Asia-Pacific stocks outside Japan (.MIAPJ0000PUS) last rose 0.25%, while Shanghai stocks (.SSEC) rose 0.6%. The Japanese Nikkei (.N225) recorded 0.1%.
MSCI’s widest gauge of world equities (.MIWD00000PUS) rose 0.05% on late Asian trading and stayed just below Thursday’s record high.
“Markets look ahead to economic normalization as vaccines will go around. Stock prices are likely to rise gradually as we look at the gains ahead,” said Tomo Kinoshita, global market strategist at Invesco Asset Management in Tokyo.
Markets in Asia were broadly stable after China reported record growth of 18.3% in the first quarter, although the outcome was slightly below expectations, while retail sales rebounded strongly last month. read more
The data has changed little to the view that the rapid expansion is expected to slow down later this year as the government turns its attention to curbing financial risk in overheated parts of the economy.
“Regulators could make further efforts to cool the real estate market and control domestic leverage. Tax discipline could also be strengthened, leading to a slowdown in local government funding and infrastructure investment,” said Chaoping Zhu, global market strategist at JP Morgan Asset Management in Shanghai. .
Data from the US was also positive overnight, with retail sales rebounding 9.8% in March, pushing sales levels up 17.1% above pre-pandemic levels to a record high. read more
The better economic outlook was underscored by other data, including the first claims for unemployment benefits which fell to their lowest level since March 2020 last week.
“The recovery in the US looks very strong. And with restaurants and hotels, both of which are labor-intensive, reopening, we can see significant wage increases in the coming month,” said Koichi Fujishiro, senior economist at Dai-ichi Life Research.
Despite strong data, US bond yields fell, partly driven by Japanese purchases, as they entered a new fiscal year this month.
The 10-year yield on US Treasuries fell to 1.529% on Thursday, a five-week low, and last stood at 1.578%, from the 14-month high of 1.776% set at the end of March.
“The market has already fully priced in a US economic recovery in the near term. And if the Federal Reserve holds interest rates for the next two to three years, it would undoubtedly be very attractive when compared to Japanese or Eurozone bonds. Said Chotaro Morita, chief fixed income strategist at SMBC Nikko Securities.
The decline in long-term returns has been beneficial for equities, and technical stocks in particular, given the idea that their historically expensive valuations can be justified because investors would have no choice but to buy stocks to make up for the low yields of bonds.
On Wall Street, the S&P 500 (.SPX) rose 1.11%, while the tech-heavy Nasdaq Composite (.IXIC) rose 1.31%, hitting its record high in February.
In the foreign exchange market, lower US yields held back the US dollar.
The euro was at $ 1.1951 after hitting a six-week high of $ 1.19935 overnight, while the US currency fell to a three-week low at 108.61 yen and last traded at 108. 89.
Gold also reached a seven-week high of $ 1,769 an ounce, last trading at $ 1,765.50.
Oil prices hit a month high thanks to higher demand forecasts from the International Energy Agency (IEA) and OPEC, as well as positive data from the US and China.
Brent futures were up 0.6% from $ 67.37 a barrel, while US crude oil rose 0.55% to 63.81 a barrel, both on track for their first substantial weekly gains in six.
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