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Global stocks finish at record highs, oil climbs for 5th week

EconomyJun 25, 2021 05:05PM ET
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2/2 © Reuters. FILE PHOTO: An investor sits in front of a board showing stock information at a brokerage office in Beijing, China, December 7, 2018. REUTERS/Thomas Peter/File Photo 2/2

By Chris Prentice and Carolyn Cohn

WASHINGTON/LONDON (Reuters) -Wall Street notched broad gains on Friday, with the S&P 500 index closing at a record and global shares also finished at an all-time high, while oil prices rose for a fifth straight week.

Weaker-than-expected inflation data and news that U.S. President Joe Biden has secured a bipartisan infrastructure agreement with lawmakers gave a boost to stocks. The plan is valued at $1.2 trillion over eight years, of which $579 billion is new spending.

The S&P 500 rose 2.7% for the week, its strongest weekly gain since early February as Nike (NYSE:NKE) and bank stocks rose, and weaker-than-expected inflation data eased worries about a sudden tapering in stimulus by the Federal Reserve. (N)

The Dow Jones Industrial Average rose 0.71% to end at 34,438.58 points, while the S&P 500 gained 0.34%. The Nasdaq Composite dropped 0.06% after holding near the previous session's record high.

MSCI's gauge of stocks across the globe closed at a record high of 721.91.

The pan-European STOXX 600 rose 0.13%, ending the week with gains of 1% following sharp swings on concerns of higher inflation hitting real income and leading central banks to raise interest rates.

Britain's FTSE 100 index was up 0.37% and Germany's DAX edged up 0.12%.

The latest U.S. personal consumption expenditures (PCE) data showed a measure of underlying inflation rose less than expected in May. Core PCE rose 3.4% year-over-year, above the Fed's 2% flexible target.

"Economic data released this morning was mixed, but important readings in inflation were either in line with or slightly below expectations," Paul Hickey of Bespoke Investment Group, LLC said in a note.

Views on the inflation outlook remained mixed.

"Today's inflation data was another vote of confidence for the inflation is transitory camp," said Edward Moya, a senior market analyst with OANDA.

U.S. inflation will remain elevated for two to four years, and only a market crash will prevent central banks from tightening in the next six months, BofA top strategist Michael Hartnett said in a note.

A build-up of financial stability risks linked to a low interest rate environment could lead to another downturn that interrupts the labor market recovery and impedes a return to maximum employment, Boston Federal Reserve Bank President Eric Rosengren said on Friday.

Yields for benchmark 10-year U.S. Treasuries, jumped back above 1.50% to close out a week in which yields notched their largest gains since March. [US/]

Germany's 10-year yield, the benchmark for the euro area, edged up to -0.156%.

Emerging market stocks rose 0.89%. MSCI's broadest index of Asia-Pacific shares outside Japan ended about 1% higher, while Japan's Nikkei rose 0.66%.

Monetary and fiscal stimulus around the world in response to the COVID-19 pandemic is boosting financial assets, despite an uneven pace of recovery between regions, said Eddie Cheng, head of international multi-asset portfolio management at Wells Fargo (NYSE:WFC) Asset Management.

"Bonds go up, equity goes up, commodities go up - that is very much a liquidity-driven market," Cheng said.

Sebastien Galy, senior macro strategist at Nordea Asset Management, said the U.S. infrastructure spending plan was "likely big enough for the economy without overheating it unnecessarily," adding in a note that it meant "growth expectations improve somewhat."

Oil prices rose for a fifth week after climbing to their highest since October 2018, on expectations demand growth will outstrip supply and OPEC+ will be cautious in returning more crude to the market from August.

Brent futures rose 62 cents, or 0.8%, to settle at $76.18 a barrel, while U.S. West Texas Intermediate (WTI) crude rose 75 cents, or 1.0%, to $74.05.

The U.S. dollar eased against a basket of other currencies, in choppy trading.

The Japanese yen strengthened 0.09% versus the greenback and the euro was up 0.07%.

Mexico's peso extended gains after a surprise interest rate hike, while Latin American currencies were set to outpace their emerging market peers this week on hawkish central bank signals.

Sterling traded at $1.3885, down 0.27% on the day and on track for its worst month versus the dollar since September, after the Bank of England kept the size of its stimulus program unchanged and left its benchmark interest rate at an all-time low of 0.1% on Thursday.

Spot gold added 0.3% to $1,779.74 an ounce. U.S. gold futures gained 0.61% to $1,776.60 an ounce. [GOL/]

Global stocks finish at record highs, oil climbs for 5th week
 

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Comments (8)
Jouni Matero
Jouni Jun 26, 2021 4:54PM ET
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Investors are witnessing the “biggest US fantasy trip of all time” in the stock market thanks to a clueless Federal Reserve, speedy stimulus and surprising success with Covid-19 vaccinations, according to Jeremy Grantham, financial historian and co-founder of the investment firm GMO. Yeah, that's basically what's going on.
Junior Moreno
Junior Moreno Jun 25, 2021 8:09PM ET
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Every time the CBOE SKEW index hit 138, the SP500 dropped 10% shortly thereafter. Whenever it reached 157, the SP500 dropped 20% immediately. Today, the CBOE has just reached a record of 170, which indicates proportionally an immediate drop of the SP500 by more than 28%.    However, there is an additional data: In July 2020, the agency Fitch Ratings had already signaled the downgrade of the US rating due to its growing deficit. In 2011, when the US lost the AAA rating, the SP500 dropped 20%.    Therefore, with the CBOE SKEW index hitting a record 170 today, we could see from next Monday an immediate drop in the SP500 of more than 40%.
zara zaib
zara zaib Jun 25, 2021 8:27AM ET
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Great read, looks like gold is all set to see some new highs, after the bloodbath gold has been facing. how willl the biden govt decisions make an impact on XAU/USD.
Kaveh Sun
Kaveh Sun Jun 25, 2021 2:36AM ET
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Everything is ‘human infrastructure’. Is there anything we do, do not relate to human? Biden wont sign the bill if it doesnt have the ‘human infrastructure’ in it. How much pork in the bill is the question.
Kaveh Sun
Kaveh Sun Jun 25, 2021 2:31AM ET
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Im ok with fixing building physical things ie the roads, bridges, wires. ‘Human infrastructure’ is pure baloney
CHADWICK RICHINGTON
CHADWICK RICHINGTON Jun 25, 2021 2:10AM ET
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You cannot print your way to prosperity
Tiberius Augustus
Tiberius Augustus Jun 25, 2021 2:10AM ET
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Been working for 10yrs
Steffen vdm
Steffen vdm Jun 25, 2021 1:31AM ET
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They are all happy US is undermining their own position
Robert DZ the patterns
Robert DZ the patterns Jun 24, 2021 11:48PM ET
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pump
 
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