Stocks hover near record highs on rebound bets, oil soars above $ 70
Stock markets hovered near record highs on Wednesday as investors applauded the latest evidence of a sustained rebound in global economies and higher oil prices pushed energy stocks higher.
The mood was less favorable than on Tuesday, however, as traders waited for crucial US employment data on Friday to assess what growing evidence of a faster-than-expected economic recovery would mean for central bank policy. in the United States and Europe.
A strong expansion in factory activity in the United States and Europe in May had lifted global stocks to record highs on Tuesday.
The large Euro STOXX (.STOXX) gained 0.22% slightly below Tuesday’s record. UK stocks continued their rally with the FTSE 100 (.FTSE) rising 0.36%, while the German DAX (.GDAXI) and French CAC 40 (.FCHI) rose slightly.
The MSCI Global Equity Index (.MIWD00000PUS), which tracks the shares of 49 countries, was down 0.1%. Futures were pointing slightly lower on Wall Street at the opening.
Crude oil prices rose again after closing above $ 70 a barrel for the first time in two years, helped by investors betting that the economic recovery would increase demand for energy and supply would rise. delay.
Mark Haefele, chief investment officer at UBS, Global Wealth Management, said the immunization rollout would stimulate “a return to normal patterns of mobility, supporting energy demand,” while price support also came from an OPEC showing good judgment in increasing production.
“We see energy companies as among the main beneficiaries of the larger trend of global reflation, along with financials,” he said.
As broad stock markets remain near record highs, the momentum at the start of the year has run out of steam as investors begin to worry about a stronger-than-expected rebound in COVID-19 means a higher inflation and a tightening of monetary policy sooner than expected.
Economies are recovering much faster than expected – data on Wednesday showed Australia’s economy growing in the last quarter as consumers and businesses abandoned spending, pushing output back above what it was. last year before the pandemic. Read more
This helped the Aussie stock market hit its latest all-time high, but couldn’t push the Aussie out of its recent range as the central bank stubbornly sticks to its conciliatory tone.
IGNORE INFLATION DATA
Bond and currency markets were calm as traders waited for data for clues on the progress of the recovery.
The Aussie last lost 0.3% to $ 0.7730. The euro slipped 0.2% to $ 1.2194, just below recent highs as the dollar rebounded from five-month lows against its main rivals.
As investors have built significant shorts against the US dollar, some investors worry in a surprised hawkish tone from the Federal Reserve at its meeting later in June.
Benchmark 10-year US Treasury rates were flat on Wednesday at 1.6113%.
German 10-year benchmark Bund yields fell 1 basis point to 0.187%, but largely ignored HICP data on Tuesday, showing eurozone inflation hit 2% in May, a sign that the markets were convinced that the European Central Bank would not decide to slow down the pace of its bond purchases at its meeting on 10 June.
“As major developed economies continue to reopen after COVID shutdowns, the focus on central bank meetings will intensify,” MUFG analysts said in a monthly outlook note.
They expect the ECB to avoid signaling a slowdown in bond buying, but believe the Fed could confirm that “very initial” talks about cutting its bond purchases have started.
Brent futures rose 0.6% to $ 70.65 a barrel and US West Texas Intermediate crude 0.56% to $ 68.10 a barrel, despite the deal from the OPEC + alliance to increase production in July. Read more
Cryptocurrency prices were calm, with Bitcoin rising 1% to $ 37,127.
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