| 6 December 2023, Wednesday |

World shares near record high on Fed, earnings, but Asia slips

World stocks held near a record high as strong U.S. economic data, robust corporate earnings and the Federal Reserve’s commitment to continue supporting the economy fueled investors’ appetite for risk.

Asian stocks had less luck, with MSCI’s ex-Japan index losing 0.6% (.MIAPJ0000PUS), following a softer-than-expected survey on China’s manufacturing.

“China’s economic recovery in January-March was strong but there are some doubts over whether you can take it at face value,” said Wang Shenshen, senior strategist at Mizuho Securities.

Chinese tech giant shares listed in Hong Kong also buckled as Beijing summoned 13 internet platforms to order them to strengthen compliance with regulations, weighing on the Hang Seng (.HSI) index. read more

Mainland Chinese shares (.CSI300) lost 0.25% while Japan’s Nikkei (.N225) shed 0.7% on position adjustments ahead of a long weekend. Both markets will be closed through Wednesday. read more

European stocks are expected to dip slightly, with euro Stoxx futures down 0.1% and Britain’s FTSE futures trading 0.2% lower. MSCI’s broadest gauge of world stocks covering 50 markets, ACWI (.MIWD00000PUS), however, was little changed and stood close to a record peak touched the previous day and up 5.1% on the month.

On Wall Street, the S&P 500 (.SPX) also closed at an all-time high while the Nasdaq Composite (.IXIC) hit a intraday record before paring some gains.

For both ACWI and S&P500, analysts are now expecting the earnings in the next 12 months to recover to above their pre-pandemic levels.

With just over a half of S&P500 companies reporting earnings, about 87% beat market expectations, according to Refinitiv, the highest level in recent years.

Amazon (AMZN.O) was the latest to report stellar results late on Thursday, lifting its shares by 2.4% in after-hours trade.

Data on Thursday showed U.S. economic growth accelerated in the first quarter, fueled by massive government aid to households and businesses. read more

New York City aims to “fully reopen” on July 1 after more than a year of closures and capacity restrictions, Mayor Bill de Blasio said, buttressing hopes for recovery in the battered service sector, an important source of employment.

That came against the backdrop of the Federal Reserve’s reassurance on Wednesday that it is not time yet to begin discussing any change in its easy monetary policy.

The 10-year U.S. Treasury yield rose to 1.690%, its highest in more than two weeks, and last stood at 1.640% .

“For now we are likely to see strong economic data from the U.S. and that means we need to be wary of further rise in U.S. bond yields, and the dollar/yen,” said Toshiya Nakamura, chief manager of forex trading at Mitsubishi Trust Bank.

In the currency market, the yen was listless at 108.79 per dollar , having hit a two-week low of 109.22 as higher U.S. bond yields helped the dollar.

The positive risk mood saw the euro extending its bull run to a two-month high of $1.2150 in the previous session and it last stood at $1.2115 . With 3.3% gains so far this month, it is on course for its biggest monthly rise in 9 months.

The Canadian dollar extended its gains to a three-year high of C$1.22715 per U.S. unit , boosted by the Bank of Canada’s tapering of its bond-buying programme and higher commodities including oil and lumber.

Oil prices took a breather after hitting six-week highs on strong U.S. economic data.

Brent slipped 0.8% to $68.00 per barrel, after having hit a high of $68.95 on Thursday while U.S. West Texas Intermediate (WTI) eased 0.9% to $64.41 per barrel .

“Strong U.S. data is supporting the market. But on the other hand, given that oil producers have capacities to boost outputs further, there will be resistances around $65 for WTI and $70 for Brent,” said Tatsufumi Okoshi, senior commodity strategist at Nomura Securities.

  • Reuters