Equities Eye Third Week of Gains After Tech Boost, Dollar Dips

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LONDON—Global shares got a tech boost to assistance tee up a 3rd consecutive week of gains connected Friday, contempt increasing ostentation concerns, portion the dollar dipped and lipid prices bounced disconnected their lows.

MSCI’s broadest gauge of planetary shares was up 0.1 percent, 1.4 percent higher connected the week and conscionable 0.8 percent disconnected its all-time high. Europe’s apical markets were each up, with the biggest, Britain’s FTSE 100, up 0.4 percent.

That followed gains successful Asia, wherever Japan’s Nikkei precocious 0.3 percent, led by the exertion sector, and equity bulls were besides comforted by quality that heavy indebted Chinese spot steadfast China Evergrande Group had made a astonishment involvement payment, averting a default for now.

The risk-on code came contempt increasing capitalist interest that persistent ostentation could unit cardinal bankers to tighten monetary argumentation astatine a constituent wherever planetary economical maturation remains fragile.

Data connected Friday showed euro portion ostentation expectations are astatine their highest successful years, amid a rash of warnings from companies including Nestle, ABB, and Unilever.

The German 10-year breakeven ostentation rate, which represents the quality successful output betwixt a nominal enslaved and its inflation-indexed counterpart, roseate to astir 1.81 percent, the highest since April 2013.

Rising prices crimped euro portion maturation successful October and could acceptable the country for a pugnacious gathering of the European Central Bank adjacent week, said Neil Birrell, Chief Investment Officer astatine plus manager Premier Miton.

“The ECB meets adjacent week, it has plentifulness to discuss, a faltering system and rising inflation; it is nether unit to tackle the ostentation spike but needs to tread cautiously with immoderate alteration successful policy.”

Despite interest that ostentation pressures could propulsion governments to tighten monetary argumentation excessively quickly, Mark Haefele, Chief Investment Officer, UBS Global Wealth Management, said successful a enactment to clients that equities could inactive determination higher.

“With existent issues inactive appearing much impermanent than structural, we judge equity markets volition proceed to determination higher,” Haefele said.

ecb.frankfurt The office of the European Central Bank (ECB) successful Frankfurt, Germany connected March 12, 2016. (Kai Pfaffenbach/Reuters)

“Indeed, tiny increases successful ostentation expectations tin beryllium affirmative for markets if it helps to banish fears of deflation. Furthermore, by our assessment, planetary maturation remains strong, proviso concatenation challenges should recede into 2022, and firm net should proceed to grow.”

U.S. banal futures constituent to a level unfastened connected Wall Street, aft the currency scale posted a grounds closing precocious overnight, led by surging tech shares.

Next week, Facebook, Apple, Amazon, and Google-owner Alphabet each report, with bulls hoping they tin travel forecast-beating net this week from Netflix.

Meanwhile, yields connected benchmark 10-year Treasury notes were astatine 1.6908 percent, easing backmost from a five-month precocious of 1.7050 percent reached overnight.

The dollar index, which gauges the greenback against six large rivals, was down 0.1 percent to 93.634, contempt initially bouncing disconnected caller lows aft U.S. jobless claims fell to a 19-month low, pointing to a tighter labour market.

The U.S. Federal Reserve has signalled it could commencement to taper stimulus arsenic soon arsenic adjacent month, with complaint hikes to travel precocious adjacent year. Full employment is among the Fed’s stated requirements for rates lift-off.

Fed Chair Jerome Powell speaks aboriginal connected Friday successful a sheet discussion.

Across commodities, lipid prices bounced disconnected their overnight lows, up 0.3 percent, with some Brent crude and West Texas Intermediate conscionable astir successful the achromatic for the week and earlier threatening to interruption a multi-week winning run.

Gold was up 0.4 percent connected the backmost of the weaker dollar, connected people for its 2nd week of gains.

By Simon Jessop