Strong Asia puts global equities on extended rally, US stimulus in focus
A rally in Asia put global stocks on track for a seventh day of gains on Friday as investors bet the United States will pull the world out of the COVID-19 pandemic, with focus on increased spending billions of dollars by the Biden administration.
Tokyo led the advance, with the Nikkei (.N225) jumping 2.1%. The largest MSCI index for Asia-Pacific stocks outside of Japan (.MIAPJ0000PUS) rose 1.1% and hit its highest level this month.
The Hang Seng climbed 0.6%, but Chinese blue chips (.CSI300) were an outlier, sliding 0.1% per day after closing at a nearly three-month high.
The MSCI World Stock Index (.MIWD00000PUS) added 0.2% to 710.34, a fraction of the all-time close to 710.36 set on May 7.
European equity markets appeared poised to open more sharply, with pan-regional Euro Stoxx 50 futures up 0.4% in early trades. FTSE futures were also 0.4% higher.
US stocks were also on the cusp of further gains after the S&P 500 (.SPX) rose 0.1% overnight, with futures showing a 0.3% increase at the opening.
The New York Times reported Thursday that President Joe Biden will ask for $ 6 trillion in federal spending for fiscal 2022, a day before the White House unveils its budget proposal. Read more
Meanwhile, the number of Americans filing new jobless claims has fallen to its lowest since mid-March 2020, data showed Thursday, with businesses desperate to get workers to meet demand. growth triggered by an economy reopening. Read more
A separate report confirmed a 6.4% acceleration in the annualized rate of economic growth in the last quarter, supported by a massive fiscal stimulus.
While the scale of U.S. government spending has fueled fears that a spike in inflation could force the Federal Reserve to act faster to cut asset purchases and tighten lending rates, an increase in spending is broadly expected. good for global growth and boosted investor sentiment, said Kyle Rodda, a market analyst at IG in Melbourne.
“It’s a market that has run out of steam a bit over the past three weeks, but there is nothing that has happened to suggest that the equity bull market is under imminent threat,” he said. -he declares.
The results of a Reuters poll of around 300 analysts showed most of them saw global stocks continue to rise this year thanks to a strong economic recovery and earnings, although any acceleration in inflation would temper. the enthusiasm of investors. A majority said a short-term correction was unlikely.
A test of the soaring inflation thesis comes later Friday with the release of a report closely watched by U.S. central bankers: Basic Personal Consumption Spending.
Several Fed officials returned this week again to calm nervousness over mounting evidence of price pressures, although they also signaled a possible start of talks on reducing stimulus measures.
Fed Supervisory Vice Chairman Randal Quarles said on Thursday he was “fully committed” to keeping monetary policy at full throttle while jobs recover, while exposing the case that risks “to the rise “for inflation could increase.
Positive signals in the economy helped push benchmark Treasury yields back above 1.6% overnight. The 10-year note fell 1.6181% in Asia on Friday, compared to 1.5520% mid-week.
Higher yields weighed on technology stocks, amid a shift from growth stocks to value stocks. The Dow Jones Industrial Average (.DJI) rose 0.4%, while the Nasdaq Composite (.IXIC) was down 0.3%.
Friday will be the last trading day of the month for Wall Street due to a statutory holiday on Monday.
The dollar was stuck just below a one-week high against major peers as traders looked to the next inflation report.
The dollar index sat at 90.063 on Friday, after hitting 90.179 the previous session for the first time since May 20.
Oil prices extended their gains from Thursday as strong US economic data offset investor concerns over the potential for increased supplies to Iran.
Brent rose 32 cents, or 0.5%, to $ 69.78 a barrel, while U.S. West Texas Intermediate (WTI) crude also added 32 cents, or 0.5%, to $ 67.17 the barrel.
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