World shares close in on record peak

Global shares have closed in on their record peak, with Asian shares taking their lead from Wall Street, as progress in vaccine distribution prompted bets on further normalisation in the global economy and earnings recovery.

MSCI’s gauge of Asian shares outside Japan rose 0.4 per cent on Friday while Japan’s Nikkei rallied one per cent.

An index of the world’s major 50 markets, MSCI ACWI , extended its gains into a fifth day to come within reach of a record high touched about two weeks ago.

On Wall Street, each of major indices rose more than one per cent on Thursday, with the Nasdaq Composite Index and S&P 500 setting record highs.

Expectations of a large stimulus by the Biden administration also supported risk sentiment while better-than-expected data on US job markets published in the past two days is fanning a bullish mood on the upcoming payroll report due later in the day.

Longer-term US Treasury yields rose in anticipation of a large pandemic relief bill from Washington as well as on heightening inflation expectations.

The benchmark 10-year yield stood at 1.136 per cent, having risen to a three-week high of 1.162 per cent the previous day while the 30-year bonds yielded 1.929 per cent, near its 10 1/2-month high of 1.951 per cent touched on Thursday.

Bond yields rose in Europe as well, with Germany’s 30-year government bond yield climbing back in positive territory for the first time since September.

A market gauge of future US inflation was at its highest since October 2018 while that for the euro zone hit its highest since May 2019.

In the currency market, the dollar strengthened against most of its peers as traders’ focus appeared to shift to the relative strength of the US growth.

Until recent weeks, the dollar had been sold on expectations that global economic recovery will promote outflows of funds to riskier currencies from the safe-haven dollar.

The US dollar index stood near a two-month high, having risen 1.1 per cent so far this week, on course for its biggest weekly increase since October.

The euro changed hands at $US1.1964, having hit a two-month low of $US1.1955 overnight while the yen hit a 3-1/2-month low of 105.70 per dollar.

The British pound stood at $US1.3678 not far from its 2-1/2-year peak of $US1.3759 hit late last month.

Strength in the dollar pushed gold to a two-month low of $US1,785.10 per ounce on Thursday. The metal was last traded at $US1,797.40.

Oil extended its gains on upbeat economic mood, falling inventories and the OPEC+ decision to stick to its output cuts.

US crude rose one per cent to $US56.80 per barrel and Brent was at $US59.38, up 0.9 per cent.

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