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Daily Traders Edge

Strong economic data lift stocks to record highs

April 06
10:45 2021

World stocks hit record highs on Tuesday, supported by strong economic data from China and the United States, while currency and bond markets paused after a month of rapid gains in the dollar and Treasury yields.

Equities as measured by the 49-country spanning MSCI All Country World Index reached a record high as European stocks caught up with gains in Asia and Wall Street overnight in their first trading session since the Easter holiday.

The pan-European STOXX 600 index climbed to a record high of 436.47 points after the open in Europe and was up 0.8% at 1118 GMT.

Profit-taking pushed Japan’s Nikkei down 1% and dragged on the Shanghai Composite.

The S&P 500 closed Monday at a record high and futures dipped 0.2% on Tuesday.

On the heels of a strong U.S. jobs report on Friday, March data showed services activity rising to a record high. China’s services have also gathered steam with the sharpest increase in sales in three months.

“We think investors should not fear entering the market at all-time highs,” said Mark Haefele, chief investment officer at UBS Global Wealth Management.

“We recommend continuing to position for the reflation trade as the economic recovery gathers pace – data released Friday showed U.S. non-farm payrolls surged by 916,000 in March, the biggest gain since August. “

The yield on benchmark 10-year U.S. Treasuries fell to 1.6986%, while the U.S. dollar has mostly missed out on a big bounce from the strong data and held at $1.1860 per euro a day after posting its steepest drop since mid-March.

Elsewhere, Swiss lender Credit Suisse sought to draw a line under its exposure to the implosion of hedge fund Archegos Capital, announcing the debacle would cost it about $4.7 billion and two senior executives their jobs.

STEADY STATE

The steadying Treasury yields and dollar follow a charge higher over the first quarter, with 10-year yields rising 83 basis points, the biggest quarterly gain in a dozen years, and a the dollar index gaining 3.6%, the most since 2018.

“Bonds have settled down now,” said Omkar Joshi, portfolio manager at Opal Capital Management in Sydney, after a hard and fast selloff. “I think markets can keep powering on from here.”

Continue Reading at Reuters

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