Global stock markets hit a record high
Global stock markets rose to record highs as investors hold positions that predict the economy will recover strongly from the coronavirus, but remain cautious until the Fed’s next monthly meeting.
The FTSE Global Index rose slightly by 0.1%, setting a new record. Developed and emerging market stock indicators have barely gained 1.1% this month after they rose sharply earlier this year.
The Stoxx Europe 600 index edged up 0.3%, setting a record high, but it has only risen 0.3% so far in June.
Caroline Simmons, Chief Investment Officer of UBS Wealth Management UK, said: “Economic data continues to improve, but everyone is looking forward to it.” “People are now waiting to see what happens to the central bank,” she added.
The Fed, the world’s most influential interest rate setter, will hold its monthly meeting next week. The meeting will be closely followed after some of its policymakers have called for negotiations to reduce the $120 billion in bond purchases that have boosted financial markets since March last year. attention.
The U.S. Economic Consultative Bureau predicts that the annual growth rate of U.S. economic output in the second quarter of this year will reach 9%. The European Central Bank also raised its forecast for economic growth in the Eurozone on Thursday, while data on Friday showed that the UK’s April GDP increased by a record 27.6% compared with the same period last year.
Investors are weighing this progress, which increases the likelihood of strong corporate earnings and how it might affect the future path of central bank policy.
“The Fed may begin to discuss reducing asset purchases more publicly in the coming months and think they will actually scale down next year,” Simmons said.
Despite fading concerns and strong US inflation data, government bonds continued to rise on Friday, starting earlier this week. The yield on the 10-year U.S. Treasury note, which is the benchmark for the global debt market, fell 0.02 percentage points to 1.443%, close to the lowest level since early March. The German equivalent of German government bond yields fell 0.03% to minus 0.285%.
The U.S. Department of Labor reported on Thursday that overall consumer price inflation accelerate It increased by 5% in the 12 months ending in May—this is the largest year-on-year increase since 2008.
Daiwa economist Chris Scicluna commented that investors are “obviously satisfied that this result is mainly due to the normalization of prices related to the pandemic, rather than indicating that demand pressures are stronger than expected, which may disrupt the Fed’s dovishness. Policy outlook”.
However, in a research report, the investment committee of the Swiss bank Credit Suisse warned that “investors’ complacency about inflation has increased”.
“If another round of high inflation indicators prompts central banks, first of all the Federal Reserve, to show less patience to keep the monetary environment loose, the market may be caught off guard,” Credit Suisse said.
In terms of currency, the exchange rate of the euro against the US dollar was stable, buying 1.2167 US dollars. The pound fell 0.1% to 1.4153 US dollars. As traders waited for further clues from the Fed, the dollar index, which measures the exchange rate of the U.S. dollar against its major trading partners, remained flat after narrow fluctuations for most of the month.
The international oil benchmark Brent crude oil rose 0.2% to US$72.68 per barrel.