Tech shares set the stage for a third week of gains for global stocks
MSCI in touching distance of all-time high, Evergrande makes a surprise payment, while the dollar eases and oil prices hold steady
London — Global shares were on course for their third straight week of gains on Friday, buoyed by tech stocks in Asia overnight, while the dollar dipped and oil prices held steady.
MSCI’s broadest gauge of global shares was up 0.1% in early European trade, 1.4% higher on the week and just 0.8% off its all-time high. Europe’s top markets were all higher, with the biggest, Britain’s FTSE 100, up 0.4%.
That followed gains in Asia, where equity bulls were also comforted by news that heavily indebted Chinese property firm China Evergrande Group had made a surprise interest payment, averting a default for now.
Japan’s Nikkei advanced 0.3%, led by the technology sector, while energy and basic materials shares were the biggest drags; coal futures extended their losses after Beijing signalled it would intervene to cool surging prices that contributed to the country’s electricity shortage.
More broadly, investors have become increasingly concerned that persistent inflation could force central bankers to tighten monetary policy at a point where global economic growth remains fragile.
Mark Haefele, CIO at UBS Global Wealth Management, said in a note to clients that equities could still move higher, despite growing concerns about the impact of inflation and the potential for central banks to tighten policy.
“With current issues still appearing more temporary than structural, we believe equity markets will continue to move higher,” Haefele said.
“Indeed, small increases in inflation expectations can be positive for markets if it helps to banish fears of deflation. Furthermore, by our assessment, global growth remains strong, supply chain challenges should recede into 2022, and corporate earnings should continue to grow.”
US stock futures point to a 0.1% lower open, after the cash index posted a record closing high overnight, led by surging tech shares.
Next week, Facebook, Apple, Amazon, and Google-owner Alphabet all report, with bulls hoping they can follow forecast-beating earnings this week from Netflix.
Meanwhile, yields on benchmark 10-year Treasury notes were at 1.6828%, easing back from a five-month high of 1.7050% reached overnight.
The dollar index, which gauges the greenback against six major rivals, was down 0.1% to 93.639 on Friday, despite initially bouncing off recent lows after US jobless claims fell to a 19-month low, pointing to a tighter labour market.
The Fed has signalled it could start to taper stimulus as soon as next month, with rate hikes to follow late next year. Full employment is among the Fed’s stated requirements for rates lift-off.
Fed Chair Jerome Powell speaks later on Friday in a panel discussion.
Across commodities, oil was flat with Brent crude set for its first losing week in seven and West Texas Intermediate its first in nine.
Gold was up 0.5% on the back of the weaker dollar, on course for its second week of gains.
Would you like to comment on this article or view other readers' comments?
Register (it’s quick and free) or sign in now.
Please read our Comment Policy before commenting.