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Shares lifted by prospect of rates staying low for longer

EconomySep 06, 2021 10:45AM ET
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2/2 © Reuters. FILE PHOTO: A man wearing a protective face mask, following an outbreak of the coronavirus, talks on his mobile phone in front of a screen showing the Nikkei index outside a brokerage in Tokyo, Japan, February 26, 2020. REUTERS/Athit Perawongmetha/File Ph 2/2

By Tom Arnold

LONDON (Reuters) - Global shares posted their longest winning streak in three months on Monday, aided by hopes U.S. interest rates would stay low for longer and talk of more stimulus in Japan and China.

A holiday in the United States made for thin trading conditions, but MSCI's all-country world index gained 0.3%, touching a new record level and on course for its seventh consecutive closing high.

In Europe the STOXX index of 600 European companies was 0.8% higher, inching closer to August's record peaks.

Shares in Norsk Hydro (OTC:NHYDY) rose as much 5% to a more than 13-year peak and Rusal jumped more than 4% to its highest on record after aluminium prices hit a more than 10-year high as a coup in Guinea raised supply concerns. No producers reported being affected, however.

Three-month aluminium on the London Metal Exchange rose as much as 1.8% to $2,775.50 a tonne, its highest since May 2011.

Guinean bauxite for delivery to China was last assessed by Asian Metal at $50.50 a tonne, up 1% from Friday and the highest since March 16, 2020.

The coup added to the bullish market mood, primarily fuelled by supply concerns around carbon neutrality pledges from China and the European Union, said Carsten Menke, head of next generation research at Julius Baer.

"We are convinced that the current impact of carbon neutrality on aluminium is overstated and that prices are detached from fundamentals," said Menke. "That said, short-term price risks remain skewed to the upside."

In Asia, MSCI's broadest index of Asia-Pacific shares outside Japan rose about 0.6% overnight to the highest since late July.

Japan's Nikkei gained 1.8% to a five-month top, extending a rally on hopes a new prime minister there would bring added fiscal spending.

Hopes of fresh stimulus from Beijing through fiscal and monetary policy lifted Chinese blue chips 1.9%.

Nasdaq futures inched up 0.4%, while S&P 500 futures were up 0.3%.

Investors were still assessing the fallout from the September payrolls report, which showed a much smaller increase in jobs than expected, but also a pick-up in wages.

The latter was enough to nudge longer-dated Treasury yields higher and steepen the yield curve, even as markets speculated over whether the Federal Reserve might not start tapering until later than previously thought.

"Employment decelerated sharply in August, with little indication of a pickup in labour supply," said Barclays (LON:BARC) economist Jonathan Millar.

"This puts the Fed in a quandary as it balances risks of a sharp demand slowdown against those of tight supply and inflation."

"We still expect the Fed to signal tapering in September, but now expect it to begin in December, not November. QE will likely end by the middle of 2022."

The rise in U.S. 10-year yields to 1.33% limited some of the pressure on the dollar from the poor payrolls print, though its index still touched a one-month low before steadying at 92.26.

The dollar was changing hands versus the yen at 109.85 , while the euro stood at $1.1866 after hitting a five-week top of $1.1908 on Friday.

The European Central Bank holds its policy meeting this week and a number of policy hawks have been calling for a step back in the bank's huge asset-buying programme, though President Christine Lagarde has sounded more dovish.

Euro zone sovereign bond yields was little moved Monday, with Germany's benchmark 10-year Bund yield steady at -0.37%.

"We expect the ECB to announce a reduced pace of Q4 PEPP (pandemic emergency purchase programme) at its September meeting on the back of easier financial conditions," said analysts at TD Securities.

"All other policy levers are likely to be left on hold, with inflation forecasts revised sharply up this year and next. Communication risks are high, and Lagarde will want to avoid sounding overly hawkish, instead emphasising 'persistence'."

The prospect of a later start to Fed tapering proved only fleetingly positive for non-yielding gold, which stood at $1,821 an ounce, having reached its highest since mid-June at $1,833.80.

Oil prices stabilised after sharp falls following Saudi Arabia's slashing of prices of all crude grades to Asian customers, while leaving prices to northwestern Europe and the United States steady. [O/R]

Brent edged up 0.1% to $72.70 a barrel, while U.S. crude was flat at $69.32.

Graphic: Global asset performance - https://fingfx.thomsonreuters.com/gfx/mkt/zdpxoozoxvx/Capture.PNG

Shares lifted by prospect of rates staying low for longer
 

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Comments (9)
Jokers R Us
Jokers R Us Sep 07, 2021 3:12AM ET
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But gold and silver still selling off
Tyrone Jackson
Tyrone Jackson Sep 06, 2021 9:19PM ET
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Headline news- the fed will only taper when they have all their puts the can buy- then they will taper and reap the profits from their puts. Taper now? Lol Biden still needs 4-6 trillion for his budget and social welfare scheme. Gold silver and real estate outside of the big cities. Inflation is about to be 70’s style.
New Jazenevd
New Jazenevd Sep 06, 2021 8:59AM ET
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The money-printing race can continue long enough, longer then some folks, waiting for the “crash”, can stay solvent. Bet on this: governments will run he scheme in full until every person, trying to sit on sidelines, gets impoverished. Resistance is futile, you will be forced to join the race.
perplexed76 .
perplexed76 . Sep 06, 2021 8:59AM ET
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money printing started in 2008. Long enough? .
New Jazenevd
New Jazenevd Sep 06, 2021 8:59AM ET
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perplexed76 .  It started earlier than 2008 and will not stop soon. It fits to both prevailing human nature and prevailing social system.
Bella Shmurda
Bella Shmurda Sep 06, 2021 8:59AM ET
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Hello
Steffen vdm
Steffen vdm Sep 06, 2021 6:45AM ET
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Sooner or later the patient will need to stand on its own legs again, or not? Or is it better to keep the patient stuck to the bed, feeding heavy medicines?
jason xx
jason xx Sep 06, 2021 6:45AM ET
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Later
sandeep jadhav
sandeep jadhav Sep 06, 2021 6:45AM ET
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patient will never stand, rhe patient had forgotten to stand on its feet from 2008
michael polic
michael polic Sep 06, 2021 6:45AM ET
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the patient has been in need since 2007/2008. likely can't walk on its own ever again.
Chow Der
Chow Der Sep 06, 2021 12:49AM ET
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Seriously? Latet down due to covid fear?
Millennial Metals
Millennial Metals Sep 06, 2021 12:36AM ET
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The end game of the stimulus and money printing will not be pretty
James Wills
James Wills Sep 06, 2021 12:36AM ET
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Just kick the can down the road attitude until no levers can be pulled and we're all stuffed.
jason xx
jason xx Sep 06, 2021 12:36AM ET
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It will be fine you are just bitter and bias over losing short positions
Churn NBurn
ChurnNBurn Sep 06, 2021 12:36AM ET
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there aint gonna be no tapering… fed cant afford to crash the stock market …
Frog Trade
Frog Trade Sep 06, 2021 12:36AM ET
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the world financial economy is built on debt and expansion of debt
perplexed76 .
perplexed76 . Sep 06, 2021 12:02AM ET
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gamblers demanding new morphine doze
Fong SH
Fong SH Sep 05, 2021 11:41PM ET
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Investors are asking too much, when you get $50 gains you are hoping for $100 & when  target price meet your expectations, you hope for $200, it never ends. Small investors like us worrying too much like a global investor lol, worrying about dollar, oil, gold, unemployment, political effects ? Yes, it's important to read news, know what's going on and so forth, but reading too broad may lead to confusions. I have been investing since 1988 till now, well, had my fair share of losses but learnt through the years. Take 2021, since January till now, portfolio is up, unrealised profits about 8500, realised profit is 23860 till August 2021, how's that?
jason xx
jason xx Sep 05, 2021 11:41PM ET
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Depends what are you from 1988 until now? That's all that matters.
Mario tragik
Mario tragik Sep 05, 2021 11:33PM ET
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lol these headings change on demand or what
jason xx
jason xx Sep 05, 2021 11:33PM ET
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Yes typicial. People want answers so they give us what we want. I'd like to know what site the pros use?
 
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