Wall Street closes at all-time highs over continued monetary easing, oil prices
World shares set up camp at one-year peaks on Monday as a rally in Chinese stocks helped offset news that Japan’s economic growth had ground to a halt in the last quarter, while oil prices extended their latest rally.
Wall Street looked set to add fractionally to last week’s string of all-time highs ESc1 [.N] while London .FTSE, Frankfurt .GDAXI and Paris .FCHI were up 0.2-0.4 percent as healthcare and energy stocks kept them buoyant in Europe. [.EU]
China stood out in Asia as the blue-chip CSI300 Index .CSI300 jumped 3.3 percent to a seven-month high amid speculation more stimulus would be forthcoming from Beijing after a raft of weaker-than-expected July data.
“The big complacency is back again in some sense. It is all a bit easy,” said SEB investment management head of global asset allocation Hans Peterson.
“Luckily we went quite long of risk after Brexit and now we have taken a bit off … Technically one should note that volatility is extremely low and that is usually a reason to be on your toes.”
The need for further policy action in Japan was underlined by its subdued second-quarter economic reading, leaving the Nikkei .N225 down 0.3 percent.
MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS recouped early losses to edge up 0.2 percent.
It has climbed 14 percent since June when Britain’s vote to leave the European Union unleashed a new wave of global policy stimulus, led by aggressive action from the Bank of England.
All this easing has pushed rich-world bond yields dramatically lower and driven investors to seek higher returns in longer-term debt and in emerging markets.
Yields on British 10-year gilts GB10YT=RR have more than halved to all-time lows of 53 basis points (bps), having been up at 1.39 percent just before the Brexit vote.
That has pulled down rates right across Europe. German Bunds were at a deeply sub zero -0.16 percent ahead of U.S. trading and Spanish yields ES10YT=RR were comfortably under 1 percent at 0.92 percent having falling over 60 bps in the last couple of months. [GVD/EUR]
