By Hideyuki Sano
TOKYO, Apr 16 (Reuters) – Global stocks were near record highs on Friday after strong economic data from the United States and China cemented expectations of a strong global recovery from the coronavirus slide.
European equities are expected to open higher, with Euro Stoxx futures up 0.1% and UK FTSE futures slightly higher.
The broader MSCI index of Asia Pacific equities excluding Japan was up 0.25% at the time of writing this report, with Shanghai equities adding 0.6%. The Japanese Nikkei was up 0.1%.
MSCI’s broader gauge of global equities was up 0.05% at the end of the Asian session, remaining just below Thursday’s all-time high.
“Markets are looking towards economic normalization as vaccines will go in that direction. Stock prices are likely to rise gradually as they look at upcoming business results,” said Tomo Kinoshita, global market strategist at Invesco Asset Management in Tokyo. .
In Asia, markets were flat after China reported record growth of 18.3% in the first quarter, although the reading was slightly below expectations, while retail sales rebounded strongly last month.
The data did not change much the view that its rapid expansion is expected to moderate later this year, as Beijing is turning its attention to curbing financial risks in overheated parts of the economy.
“Regulators could make more efforts to cool down the real estate market and control internal leverage. Fiscal discipline could also be strengthened, leading to a slowdown in local government funding and infrastructure investment,” said Chaoping Zhu, Global Markets Strategist at JP Morgan Asset Management in Shanghai.
Data from the United States on Thursday was also optimistic, as retail sales rebounded 9.8% in March, raising sales 17.1% above its pre-pandemic level to a record.
The promising economic outlook was bolstered by other data, such as claims for unemployment benefits in the US, which fell last week to the lowest level since March 2020.
“The US recovery looks really strong. Now that labor-intensive restaurants and hotels are reopening, we could see a sharp rise in payrolls in the next month,” said Koichi Fujishiro, senior economist. from Dai-ichi Life Research.
Despite the good data, US bond yields fell, partly driven by Japanese purchases, which have started a new fiscal year this month.
The yield on 10-year US Treasuries fell to 1,529% on Thursday, its lowest in five weeks, and stood at 1.578% at the time of writing this report, far from its 14-month high of 1,776. % established at the end of March.
“The market has already fully priced in a short-term US economic recovery. And if the Federal Reserve holds interest rates for the next two to three years, the yield on US bonds will definitely be very attractive. compared to Japanese or euro area bonds, “said Chotaro Morita, chief fixed income strategist at SMBC Nikko Securities.
Falling long-term bond yields benefited equities, and techs in particular, on the notion that their historically high valuations may be justified because investors would have no choice but to buy equities to offset low yields in the bonds.
On Wall Street, the S&P 500 advanced 1.11%, while the Nasdaq Composite, with a great weight of technology companies, added 1.31%, approaching its all-time high established in February.
In the currency market, declining yields in the United States were a drag on the dollar.
The euro was at $ 1.1951, after hitting a six-week high of $ 1.19935 overnight, while the greenback fell to a three-week low of 108.61 yen and was trading at the time of writing. at 108.89 yen.
Gold also hit a seven-week high of $ 1,769 per ounce and stood at $ 1,765.50 at the time of writing.
Oil prices hit one-month highs thanks to higher demand forecasts from the International Energy Agency (IEA) and OPEC, as well as positive data from the United States and China.
Brent futures were up 0.6% at $ 67.37 a barrel, while US crude was up 0.55% at 63.81 a barrel, both heading for their first substantial weekly gains in six weeks.
(Edited by Gerry Doyle, Shri Navaratnam and Kim Coghill; translated by Darío Fernández in the Gdansk newsroom)