Global Stock Markets
World stocks rose on Thursday after three days of losses and European
shares opened higher, although U.S. and German bond yields near
multi-year highs checked the gains and kept stocks from regaining recent
record highs.
Wall Street is set for a firmer session, equity futures indicate ESc1, before tech giants Apple (AAPL.O), Alphabet (GOOG.O) and Amazon.com (AMZN.O) announce their results.
MSCI's all-country equity index .MIWD00000PUS rose around 0.2 percent after Tokyo bounced 1.7 percent off four-week lows. European bourses opened around 0.3 percent firmer .N225. MSCI's emerging Asian index closed 0.3 percent lower however.
This week’s meeting of the U.S. Federal Reserve was more hawkish than expected, but confirmed what markets had already expected - an interest rate rise in March, said Markus Huber, a trader at brokerage City of London Markets.
Global equity markets are torn between buoyant economic growth and double-digit company earnings, on the one hand, and the possibility that U.S. and euro zone central banks will tighten policy faster than expected.
The growth momentum was confirmed by manufacturing activity surveys on Thursday that showed Asian factories getting off to a strong 2018 start and Europe posting solid growth.
Boeing and Facebook were the latest to reinforce the solid U.S. earnings growth picture. European markets cheered improved performance at Unilever and Royal Dutch Shell (ULVR.L) (RDSa.L)
Huber said results from the likes of Amazon and Apple would be crucial.
Equity bullishness is being tempered, however, by rising global bond yields. The Fed held interest rates unchanged on Wednesday but raised its inflation outlook, no longer saying it expected price growth to stay below 2 percent. It also flagged “further gradual” rate increases.
That wording convinced many that rates could rise four times this year, rather than three.
U.S. 10-year Treasury yields surged to near four-year highs above 2.75 percent after the Fed statement, while German Bund yields are at two-year highs US10YT=RR DE10YT=RR.
Two-year U.S. yields are approaching decade-highs and could rise further should jobs data due on Friday confirm sustained labour market strength.
Pressure is building on euro zone authorities, too, to curb stimulus, with employment at record highs and Thursday’s manufacturing surveys confirming the bloc’s growth boom.
On currency markets, the dollar’s post-Fed bounce fizzled, pushing it down around 0.2 percent against a basket of currencies. The euro gained to $1.2445, just off three-year highs of $1.2538.
The British pound GBP=D4 rose 0.4 percent, after a 5 percent gain in January, its biggest monthly rise since May 2009, owing to broad dollar weakness and expectations of a Brexit deal more favourable to the UK.
Wall Street is set for a firmer session, equity futures indicate ESc1, before tech giants Apple (AAPL.O), Alphabet (GOOG.O) and Amazon.com (AMZN.O) announce their results.
MSCI's all-country equity index .MIWD00000PUS rose around 0.2 percent after Tokyo bounced 1.7 percent off four-week lows. European bourses opened around 0.3 percent firmer .N225. MSCI's emerging Asian index closed 0.3 percent lower however.
This week’s meeting of the U.S. Federal Reserve was more hawkish than expected, but confirmed what markets had already expected - an interest rate rise in March, said Markus Huber, a trader at brokerage City of London Markets.
Global equity markets are torn between buoyant economic growth and double-digit company earnings, on the one hand, and the possibility that U.S. and euro zone central banks will tighten policy faster than expected.
The growth momentum was confirmed by manufacturing activity surveys on Thursday that showed Asian factories getting off to a strong 2018 start and Europe posting solid growth.
Boeing and Facebook were the latest to reinforce the solid U.S. earnings growth picture. European markets cheered improved performance at Unilever and Royal Dutch Shell (ULVR.L) (RDSa.L)
Huber said results from the likes of Amazon and Apple would be crucial.
Equity bullishness is being tempered, however, by rising global bond yields. The Fed held interest rates unchanged on Wednesday but raised its inflation outlook, no longer saying it expected price growth to stay below 2 percent. It also flagged “further gradual” rate increases.
That wording convinced many that rates could rise four times this year, rather than three.
U.S. 10-year Treasury yields surged to near four-year highs above 2.75 percent after the Fed statement, while German Bund yields are at two-year highs US10YT=RR DE10YT=RR.
Two-year U.S. yields are approaching decade-highs and could rise further should jobs data due on Friday confirm sustained labour market strength.
Pressure is building on euro zone authorities, too, to curb stimulus, with employment at record highs and Thursday’s manufacturing surveys confirming the bloc’s growth boom.
On currency markets, the dollar’s post-Fed bounce fizzled, pushing it down around 0.2 percent against a basket of currencies. The euro gained to $1.2445, just off three-year highs of $1.2538.
The British pound GBP=D4 rose 0.4 percent, after a 5 percent gain in January, its biggest monthly rise since May 2009, owing to broad dollar weakness and expectations of a Brexit deal more favourable to the UK.
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