Global equities near records on recovery hopes

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  • Global stocks expected to post gains for 5th consecutive month
  • European equities dip but on course for best S1 since 1998
  • The dollar is heading for its best monthly increase since March

LONDON, June 30 (Reuters) – Global stocks hovered close to all-time highs on Wednesday, on track for a 12% gain for the half-year following strong US consumer confidence data, although inflation and concerns linked to the pandemic have cooled European stocks.

Billions of dollars in monetary and fiscal stimulus by central banks and governments around the world in response to COVID-19 have supported asset markets over the past year, while vaccination deployments in recent months strengthen the economic outlook.

US consumer confidence hit its highest level in nearly a year and a half in June, with growing labor market optimism as the economy reopens offsetting concerns about rising inflation.

Meanwhile, the housing price index of the Federal Housing Finance Agency hit a record 15.7% in April compared to a year ago. Read more

“The search for yield is a very powerful force. It does not yet have the necessary narrative to stop it,” said Sébastien Galy, senior macro strategist at Nordea Asset Management.

MSCI’s global stock index (.MIWO00000PUS) was stable but established for a fifth consecutive month of gains, a day after hitting an all-time high.

S&P futures rose 0.09% after the Dow Jones Industrial Average (.DJI) and S&P 500 (.SPX) rose 0.03% and 0.02% overnight, and the Nasdaq Composite (.IXIC) added 0.19%, hitting a closing record.

Moderna Inc (MRNA.O) jumped 6.0% to record high after drugmaker’s COVID-19 vaccine shows promise in lab study against Delta mutation first identified in India , with a modest decrease in response compared to the original variant. Read more

European stocks (.STOXX) edged down 0.1%.

The European benchmark, which hit record highs this month, is on track to post its biggest percentage gains in the first half of the year since 1998, but high inflation as well as the spread of the highly contagious Delta variant recently slowed gains.

German stocks (.GDAXI) lost 0.16% and UK stocks (.FTSE) lost 0.13%.

Indonesia, Malaysia, Thailand and Australia are all battling pandemic outbreaks and tightening restrictions, and Spain and Portugal have announced restrictions on unvaccinated British tourists. Read more

EYES ON THE PAYROLL

Steven Daghlian, market analyst at CommSec in Sydney, said after the global rise in equities, markets were on the alert ahead of the release of US nonfarm wage data on Friday that could influence policy from the Federal Reserve.

Economists polled by Reuters expect a gain of 690,000 jobs for June, against 559,000 in May. But the variation between the 63 estimates is significant, ranging from 400,000 to over a million.

The dollar was heading for its best monthly rise since March, mostly following a surprisingly hawkish change in the Fed’s rate outlook.

“Very optimistic” Fed Governor Christopher Waller said on Tuesday he may have to start scaling back his massive asset purchase program as early as this year to allow for the possibility of raising interest rates by now the end of 2022.

The dollar index was flat at 91.858, the yen up 0.01% to 110.51 and the euro up 0.05% to $ 1.19.

The British pound was trading at $ 1.3833, down 0.03%.

The benchmark 10-year US Treasury bill fell 1.4781%, down slightly from 1.48% on Tuesday night.

The yield on German 10-year government bonds, the benchmark for the euro area, fell 0.5 basis points to -0.18%.

The MSCI index which tracks Asian stocks outside of Japan (.MIAPJ0000PUS) was forecast for a small monthly loss, but still on track for a fifth consecutive quarterly rise, its longest such streak since 2006-2007. The Asian index was up 0.08%.

Chinese blue chips (.CSI300) added 0.65%, Australian stocks (.AXJO) rose 0.16% and settled for a ninth consecutive month of gains, and Seoul’s Kospi (.KS11) increased by 0.3%. The Japanese Nikkei (.N225) lost 0.07%.

Brent crude oil futures were unchanged at $ 74.76 a barrel and U.S. crude gained 0.26% to $ 73.17, after an industry report showed U.S. stocks fell last week.

Spot gold fell 0.43% to $ 1,754.19 an ounce, putting it on track for its biggest monthly decline since November 2016.

Additional reporting by Andrew Galbraith in Shanghai and Elizabeth Dilts Marshall in New York; Editing by Kenneth Maxwell and John Stonestreet

Our Standards: Thomson Reuters Trust Principles.


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