NEW YORK, April 17 — Gold prices hit a seven-week high and global stocks scaled new records yesterday after strong US and Chinese economic data bolstered expectations of a solid global recovery from the coronavirus pandemic.
Government stimulus, strong corporate earnings from US banks and in Europe, along with signs of economic recovery in countries leading the Covid-19 vaccination race have all helped push stock market indexes to new heights this week.
MSCI’s broadest gauge of world stocks rose 0.42 per cent to an all-time peak, lifted by surging European shares and lesser gains on Wall Street where both the Dow Industrial and benchmark S&P 500 posted their fourth week of successive gains.
As long as the strong economic rebound, tremendous fiscal and monetary support and progress on vaccine distribution remain in place, markets can grind higher, said Michael Arone, chief investment strategist at State Street Global Advisors in Boston.
“Investors and market participants continue to underestimate both the economic and earnings recovery,” he said. “The earnings numbers have continued to exceed expectations by a very wide margin.”
First-quarter earnings are expected to rise 30.9 per cent from a year ago, the highest since late 2010 when the economy was pulling out of financial crisis, according to Refinitiv data.
US homebuilding surged to nearly a 15-year high in March, the Commerce Department said yesterday, adding to robust retail sales data the prior day, suggesting the economy was roaring.
In Europe, the pan-regional STOXX 600 index closed up 0.9 per cent at a new peak, while Germany’s DAX gained 1.3 per cent to hit an all-time high and the UK’s FTSE 100 rose 0.5 per cent to close at more than one-year highs.
On Wall Street, the Dow Jones Industrial Average rose 0.48 per cent and the S&P 500 gained 0.36 per cent, both setting new highs. The Nasdaq Composite added 0.1 per cent as declines in the information technology sector weighed.
German car and truck maker Daimler rose 2.7 per cent as higher vehicle prices and strong demand in China helped it post a better-than-expected surge in quarterly operating profit.
“As the economic re-opening accelerates in the coming months, we believe the bull market remains on a solid footing,” said Mark Haefele, chief investment officer, UBS Global Wealth Management.
Chinese data showing record 18.3 per cent growth in the first quarter drove Asian shares higher, though the reading slightly undershot expectations. Retail sales bounced strongly last month.
Asian markets rallied overnight on the news. MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.4 per cent and Shanghai shares added 0.8 per cent. Japan’s Nikkei edged up 0.1 per cent.
“As the US economy and then European economies open up, it should further help Asian exports. This should support emerging market and APAC equities as well as China equities and fixed income,” said Sebastien Galy, senior macro strategist at Nordea Asset Management.
Gold prices posted their biggest weekly percentage gain, about 4.5 per cent, since early November as the slide this week in Treasury yields and a weaker dollar brightened the metal’s appeal.
US gold futures settled 0.8 per cent higher at US$1,780.20 (RM7,345.11) an ounce.
The dollar slid to a 4-week low against a basket of currencies after the sharp drop in Treasury yields on Thursday, as investors increasingly accepted the Federal Reserve’s vow to keep an accommodative policy stance for longer than expected.
The dollar index fell 0.14 per cent, with the euro up 0.13 per cent to US$1.198. The Japanese yen weakened 0.02 per cent versus the greenback at 108.78 per dollar.
The yield on US 10-year Treasuries rose 6.6 basis points in a late surge to 1.594 per cent, rebounding from multi-week lows hit the prior session.
Oil fell slightly after a week of gains built on strong US and Chinese economic data that offset concerns about rising Covid-19 infections in other major economies.
Brent crude futures settled down 17 cents at US$66.77 a barrel and US crude futures fell 33 cents to settle at US$63.13 a barrel. — Reuters
