TOKYO (Reuters) – Global shares held firm on Tuesday, with a solid foundation in place to extend their bull run to a 12th consecutive session as optimism about the global economic recovery and expectations of low interest rates drive investments into riskier assets. Oil prices soared 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.
S&P500 futures traded 0.5% higher to a record level and MSCI’s all country world index (ACWI), which has risen every single day so far this month, ticked up slightly.
“Global markets have started the week higher as investors remain confident that the pandemic will soon give way to an economic boom,” wrote Mihir Kapadia, chief executive of Sun Global Investments in London. “Unless any drastic moves take place this week, we could expect equity markets to remain strong.” Successful rollouts of COVID-19 vaccines in many countries are raising hopes of further recovery in economic activities hampered by range of anti-virus curbs. U.S. President Joe Biden is pushing ahead with his plan to pump an extra $1.9 trillion in stimulus into the economy, in a further boost to market sentiment. “The pace of the market’s rally has been pretty fast but there’s no denying that it’s pretty comfortable time for stocks with expectations of low interest rates helping inflows to stocks,” said Masahiro Ichikawa, chief strategist at Sumitomo Mitsui DS Asset Management. The bullish view on the economy lifted bond yields, with the 10-year U.S. Treasuries gaining 5 basis points to 1.252% in early Asian trade, its highest since late March. 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 tab on bond yields. Oil prices soared to their highest in about 13 months as a U.S. winter storm added fuel to their rally on hopes of further demand recovery. U.S. crude futures traded up 1.1% at $60.11 per barrel. Prices have rallied over recent weeks on tightening supplies, largely due to production cuts from the Organization of the Petroleum Exporting Countries (OPEC) and allied producers in the wider OPEC+ group of producers. Rising oil prices supported commodity-linked currencies such as the Canadian dollar while safe-haven currencies including the U.S. dollar took a back seat. MSCI’s emerging market currency index hit a record high as well. Nick Note: This is a broad based global stock market rally this is a powerful force not to be denied. Of course it is a mindless rally SO! I want to ride the wave for as long as we can. Of course this will end in tears for the people who are practicing mindless buying. Call it stock market madness SO!