Global stocks hit another record, oil surges during big data week
Global stocks hit an all-time high again and oil rose on Tuesday, with markets ignoring concerns about rising inflation and anticipating U.S. data later in the week that should provide a major clue to the health of the world. ‘Mondial economy.
Risky markets have seen gains in recent weeks as traders balance their optimism that some key markets will reopen after pandemic-induced lockdowns, fearing that rising inflation may prompt central banks to put the brakes on stimulus programs.
The recovery of COVID-19 also remains uneven in many parts of the world, with exports picking up but wider economic activity still hampered by measures to contain new epidemics.
Against this backdrop, euro area inflation in May was higher than expected at 2%, driven by rising energy costs, above the European Central Bank’s target of less than close to 2% – and with even higher levels expected later in the year.
Later in the week, Friday’s US employment data should also give a stronger direction to the Fed’s near-term policy action.
Previously, MSCI’s broadest scale of global stock markets (.MIWD00000PUS) rose 0.3% to an all-time high, thanks to large gains on major European indices, the STOXX Europe 600 (.STOXX) extending its earnings to 1.1%.
“Although global equities are now around 20% above pre-pandemic highs, a combination of strong earnings growth and reasonable valuations versus still low bond yields suggests further upswing for stocks, ”said Mark Haefele, chief investment officer, UBS Global Wealth Management.
Overnight, the largest MSCI index of Asia-Pacific stocks outside of Japan (.MIAPJ0000PUS) rose 0.6%, hitting the highest in one month and surpassing 7% in total gains so far this year.
South Korean stocks (.KS11) rose 0.6% after a jump in exports in May, and Chinese stocks (.CSI300) climbed 0.2% after data shows factory activity grew at the fastest rate this year in May. Read more
The main event this week is Friday’s US payroll data, with markets looking for a signal from the Federal Reserve on when it will start cutting its bond buying program.
According to the median forecast, 650,000 jobs were added in May, but the outcome is uncertain following an unexpected gain of 266,000 in April.
Although inflation data in the United States last week was better than estimated, another big setback on the jobs front would delay the outlook for a gradual slowdown in stimulus measures, analysts said. Read more
Societe Generale strategist Sebastien Galy said he expected employment data to be lower or in line with consensus, but given low levels of equity volatility, markets were ready to move. jump on higher-than-expected numbers.
“We remain constructive on risk as we expect disappointment on NFPs (non-farm payrolls) but the equity volatility market is likely to pick up higher prices from its lowest extremes,” a- he said in a note to customers.
As traders waited for clues as to the direction of the Fed, the dollar held steady against a basket of its major peers and the yield on 10-year US government debt was up 2 basis points.
The 10-year German Bund yield, meanwhile, remained stable at around -0.18%, as bond markets followed the news of soaring inflation in the eurozone.
Global inflation concerns have pushed gold up 8% this month to comfortably above $ 1,900, although the yellow metal dropped early gains in the last trade flat of the day.
Oil prices, meanwhile, extended their gains ahead of an OPEC + meeting and on optimism that demand for fuel will increase in the coming months as the summer driving season in the United States begins. .
Brent crude futures for August rose 2.2% to $ 70.84 a barrel, while US crude rose 2.9% to $ 68.21.
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