NEW YORK/LONDON (Reuters) – Global stock markets hit new record highs on Friday, capping another bumper week as investors seized on a dip in U.S. inflation and more forecast-beating corporate earnings.
U.S. inflation numbers this week suggested rising price growth may be peaking, which would ease pressure on the Federal Reserve to begin tapering its asset purchases.
“We see the (inflation) data as consistent with the Federal Reserve’s view that price pressures will start to fade and do not justify an early withdrawal of monetary stimulus. The market appears to share this view,” said Mark Haefele, chief investment officer at UBS Global Wealth Management.
Pandemic-era stimulus has been behind much of the surge in stock prices the past year, but a stronger than expected economic rebound across the world and massive corporate earnings have given the rally new legs in recent weeks.
The MSCI world equity index, which tracks shares in 50 countries, hit a fresh record high.
MSCI’s gauge of stocks across the globe gained 0.02%.
The Dow Jones Industrial Average and S&P 500 also hit fresh record highs in early trading.
The Dow Jones Industrial Average rose 39.29 points, or 0.11%, to 35,539.14, the S&P 500 gained 2.18 points, or 0.05%, to 4,463.01 and the Nasdaq Composite dropped 4.40 points, or 0.03%, to 14,811.86.
The pan-European STOXX 600 index rose 0.12% – on Thursday it equalled its longest ever longest winning streak. Friday would see the index extending gains for a record 10th consecutive session.
Not everyone is convinced the rally can continue, however.
“We feel a bit more cautious headed into autumn because of uncertainty on the health front, the Chinese regulatory front and the monetary policy front,” said Paul O’Connor, head of multi-asset at Janus Henderson.
Worries about a regulatory crackdown in China and a surge in the COVID-19 Delta variant have sapped confidence in Asia, where markets mostly declined.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.56%, and was 0.8% lower for the week.
Chinese blue chips weakened 0.55%, dragged down by its local semiconductor sub-index, which slumped 4.1%.
The dollar stayed close to its highest level in four months against a basket of currencies as investors looked for more hints from the Fed on its plans to reduce monetary stimulus.
The dollar index fell 0.227%, with the euro up 0.32% to $1.1765.
Nearly two-thirds of economists here polled by Reuters said the Fed is likely to announce a taper of its asset purchases – currently set at $80 billion of Treasuries and $40 billion of mortgage-backed securities per month – at its September meeting.
Benchmark 10-year notes last rose 8/32 in price to yield 1.3405%, from 1.367% late on Thursday.
U.S. crude recently fell 0.07% to $69.04 per barrel and Brent was at $71.21, down 0.14% on the day.
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