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Wall Street set to join global stocks party as investors dump bonds

Economic IndicatorsFeb 16, 2021 08:25AM ET
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2/2 © Reuters. FILE PHOTO: A man stands on an overpass with an electronic board showing Shanghai and Shenzhen stock indexes in Shanghai 2/2

By Huw Jones

LONDON (Reuters) - Wall Street was set to join a march propelling global shares to record highs on Tuesday, with investors dumping government bonds in a bet that COVID-19 vaccinations and U.S. stimulus will deliver a durable economic recovery after a year of lockdowns.

Bitcoin added to the bullish mood, climbing above $50,000 for the first time.

The MSCI's global stock index was up 0.18% at 686.30 points after hitting a record high of 686.41 points earlier in the session. A positive close would mark the 12th consecutive day of gains for the first time since January 2004.

U.S. stock futures hit record highs as investors piled into banks, energy companies other sectors that would benefit from an economic recovery. S&P500 futures were up 0.5%.

Expectations of a strong economic recovery and looser fiscal and monetary policy in the United States pushed yields on safe haven U.S., German and UK government bonds higher, with gold also taking a knock.

The 10-year Treasury yields topped 1.25% for the first time in 11 months.

"I think it's a global reflation trade very much in play, that risk-on positive investor sentiment is still very much with us," said Derek Halpenny, head of research for global markets at MUFG.

U.S. President Joe Biden is pushing ahead with his plan to pump an extra $1.9 trillion in stimulus into the economy.

"I think this most recent leg up is a reflection of the fiscal stimulus package in the U.S. is going to be larger, a supportive backdrop," Halpenny said.

EUROPEAN ECONOMY STIRS

The pan-European STOXX 600 hit its highest since late February 2020, lifted by some good economic data.

The ZEW investor sentiment index in Germany, Europe's biggest economy, rose by far more than expected in February on expectations that people will flock back to shops and other retail outlets in the coming six months.

Euro zone gross domestic product fell less than initially estimated in the last quarter of 2020 and employment edged higher against the previous three months.

Prospects for a recovery lit up commodities, with the European mining index hitting its highest level since July 2011.

"The big picture is that there is an awful lot of enthusiasm for recovery when it comes to the vaccine programme," said Michael Hewson, chief market analyst at CMC Markets.

Recovery hopes in Britain sent sterling to 2-1/2 year highs, just short of $1.40 against the dollar.

The euro crept 0.3% higher to $1.21590.

The U.S. dollar index, at 90.242, was mired at a three-week low as growing optimism about recovery sent investors into riskier currencies, including the euro and British pound.

Market sentiment in Europe was helped by gains overnight in Asian shares, with Japan's Nikkei blue chip index up 1.28% at a 30-year high.

Ord Minnett adviser John Milroy said that while share markets were positive, investors were becoming wary of the future risk of inflation due to central bank and government stimulus programmes in place around the world.

"There is a clear sense with rates staying low for some time yet and investor appetite for equities staying strong we will likely see markets hold up for some time yet," Milroy told Reuters.

Investors are looking to the minutes from the U.S. Federal Reserve's January meeting, due to be published on Wednesday, for confirmation of its commitment to maintain its dovish policy stance over the near future. That in turn is set to keep a lid on bond yields.

Oil prices jumped to a 13-month high as a deep freeze due to a severe snow storm in the United States not only boosted power demand but also threatened oil production in Texas.

Brent crude was trading at $63 a barrel, off 0.47%, after rising to its highest since January 2020 in the previous session. U.S. West Texas Intermediate (WTI) crude futures gained 0.3%, to $59.65 a barrel.

Wall Street set to join global stocks party as investors dump bonds
 

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Comments (8)
Chris Sundo
Chris Sundo Feb 16, 2021 5:21AM ET
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By how many Tn has the market gone up in Excess of what was printed electronically (out of thin air)?
Max OA
7Max7 Feb 16, 2021 2:17AM ET
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yields gaining feds powell soon need to hike rates i think real inflation is above 3% already everything rises in price
Art Fire
Art Fire Feb 15, 2021 9:45PM ET
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Ignore the downers. Lets make it a good future!
Kelly Mayer
Kelly Mayer Feb 15, 2021 9:16PM ET
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Economic boom? ... Did you have an economic boom in 2008 when all that debt turned out to be unpayable? What exactly do you think is going to happen to the economy after pumping trillions upon trillions of USD into the economy in historical record numbers that soared the countrie's debt to unbelivable (unpayable) highs? Hint: Ain't gonna be an economic boom. Though, you can still profit from a speculative market.
Art Fire
Art Fire Feb 15, 2021 9:16PM ET
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Suddenly people care again, strange how that works.
Mike Chen
Mike Chen Feb 15, 2021 9:13PM ET
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Crash will come next century
Tai Banh
Tai Banh Feb 15, 2021 8:37PM ET
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Where the ****is trump? He said if biden won the election the US stock market would crash... Lol
Tai Banh
Tai Banh Feb 15, 2021 8:37PM ET
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Lmao
Gert Poel
Gert Poel Feb 15, 2021 7:48PM ET
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crash coming soon
Iam Suleman
YesomiteSam Feb 15, 2021 7:48PM ET
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incredible insight. I am in awe.
Luke Lee
Luke Lee Feb 15, 2021 7:47PM ET
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"World stocks look to extend bull run to 12th day as reddit army continues to squeeze shorts"
 
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