👀 Ones to watch: Undervalued stocks to buy before they report Q3 earningsSee Undervalued Stocks

European shares hit highs as markets upbeat about recovery prospects

Published 04/18/2021, 08:52 PM
Updated 04/19/2021, 05:00 AM
© Reuters. A representation of virtual currency Bitcoin and U.S. One Dollar banknote are seen in front of a stock graph in this illustration
AUD/USD
-
UK100
-
US500
-
DE40
-
JP225
-
HK50
-
KO
-
SPY
-
IBM
-
DX
-
LCO
-
CL
-
NFLX
-
KS11
-
AAL
-
USO
-
NABZY
-
BTC/USD
-

By Elizabeth Howcroft

LONDON (Reuters) - World shares traded near record highs on Monday, as markets were generally upbeat about the prospects for a global economic recovery from COVID-19, ahead of a busy week for earnings.

Europe's STOXX 600 reached a record high and was up 0.2% at 0736 GMT. Asian shares hit one-month highs overnight.

MSCI world equity index, which tracks shares in 49 countries, was flat on the day, having come close to but not surpassed Friday's record high. MSCI's main European Index was up 0.1%.

Matthias Scheiber, global head of portfolio management at Wells Fargo (NYSE:WFC) Asset Management cited low interest rates, the rollout of COVID-19 vaccines and the fiscal stimulus package in the United States as reasons for his bullish stance on equities.

"Risk is coming down, volatility is coming down … we see the slow reopening of global economies, the rollout of the vaccine and the huge catch-up in demand so from that perspective it should be positive for economic growth."

"We had a strong rally in cyclical and value stocks since the start of this year - we would like to see confirmation in the earnings."

Earnings from IBM (NYSE:IBM) and Coca-Cola (NYSE:KO) are due later in the session. Netflix (NASDAQ:NFLX) reports on Tuesday. Later in the week, American Airlines (NASDAQ:AAL) and Southwest will be the first major post-COVID cyclicals to post results.

The European Central Bank meeting on Thursday will also be in focus this week. ECB President Christine Lagarde said last week that the euro zone economy is still standing on the "two crutches" of monetary and fiscal stimulus and these cannot be taken away until it makes a full recovery.

Euro zone government bond yields were lower, with the benchmark German 10-year yield down one basis point at -0.27%.

The benchmark U.S. Treasury yield, which dropped as low as 1.528% last Thursday, was at 1.5606%.

The U.S. economy is set to take off this year as more Americans get COVID-19 vaccinations and become comfortable engaging in a wider range of activities, but any accompanying spike in inflation is likely to be temporary, the Federal Reserve's newest board member said on Friday.

In currency markets, the dollar index was down 0.4% at its lowest levels in more than a month, at 91.259, having weakened since its recent peak of 93.439 at the end of March.

Dollar-yen was also down 0.5%, changing hands at 108.250.

The euro was up 0.3% versus the dollar at $1.20165.

"We have been highlighting over the past two months that USD could bottom out, in contrast to consensus, and believed that this would be a tactical problem for EM and for certain commodity trades," wrote JP Morgan's head of global and European equity strategy, Mislav Matejka, in a note to clients. "We think the risk of a firmer USD, through rising US-Europe interest rate differential, is not finished."

Matejka also said that, although there is the technical potential for a correction in equities, he would not cut stocks exposure on the six- to nine-month horizon.

"We think that it is more likely that we will be raising our year-end targets, rather than reducing them, as we move through the summer," he said.

Likewise, Wells Fargo Asset Management's Matthias Scheiber said "We believe we are in the 'buy the dip' environment at this moment given that both fiscal and monetary policy are very supportive, so if we would see a correction … we would probably increase the equity position.”

Bitcoin was up nearly 2% at around $57,400, nursing losses from Sunday, when it plunged as much as 14% to $51,541.

© Reuters. FILE PHOTO: The London Stock Exchange offices in the City of London, Britain

Oil prices fell as rising COVID-19 infections in India prompted concern than stronger measures to contain the pandemic would hurt economic activity.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.