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Global stocks hit new highs on strong China, U.S. data

Global stocks

MSCI’s broadest gauge of world stocks gained 0.42% to an all-time high, while the Dow Industrial and S&P 500 posted their fourth week of successive gains

Gold prices hit seven-week high and global stocks scaled new records on Friday after strong U.S. and Chinese economic data bolstered expectations of a strong global recovery from the pandemic.

Government stimulus, strong corporate earnings from U.S. banks and in Europe, along with signs of economic recovery in countries leading the Covid vaccination programme have all helped push stock market indexes to new heights this week.

MSCI’s broadest gauge of world stocks gained 0.42% to an all-time high, lifted by surging European shares and lesser gains on Wall Street where both the Dow Industrial and benchmark S&P 500 posted their fourth week of successive gains.

As long as the strong economic rebound, tremendous fiscal and monetary support and progress on vaccine distribution remain in place, markets can grind higher, said Michael Arone, chief investment strategist at State Street Global Advisors in Boston.

Investors and market participants continue to underestimate both the economic and earnings recovery, he said. The earnings numbers have continued to exceed expectations by a very wide margin.

First-quarter earnings are expected to rise 30.9% from a year ago, the highest since late 2010 when the economy was pulling out of financial crisis, according to Refinitiv data.

U.S. homebuilding surged to nearly a 15-year high in March, the Commerce Department said on Friday, adding to robust retail sales data the prior day, suggesting the economy was roaring.

In Europe, the pan-regional STOXX 600 index ended up 0.9% at a new peak, while Germany’s DAX advanced 1.3% to hit an all-time high and the UK’s FTSE 100 gained 0.5% to finish at more than one-year highs.

On Wall Street, the Dow Jones Industrial Average (DJIA) added 0.48% and the S&P 500 advanced 0.36%, both setting new highs. The Nasdaq Composite gained 0.1% as declines in the information technology sector weighed.

German car and truck maker Daimler added 2.7% as higher vehicle prices and strong demand in China helped it post a better-than-expected surge in quarterly operating profit.

As the economic re-opening accelerates in the coming months, we believe the bull market remains on a solid footing, said Mark Haefele, chief investment officer, UBS Global Wealth Management.

Chinese data showing record 18.3% growth in the first quarter drove Asian shares higher, though the reading was slightly below expectations. Retail sales rebounded strongly last month.

Asian markets rallied overnight on the news. MSCI’s broadest index of Asia-Pacific shares outside Japan advanced 0.4% and Shanghai shares gained 0.8%. Japan’s Nikkei inched up 0.1%.

As the U.S. economy and then European economies open up, it should further help Asian exports. This should support emerging market and APAC equities as well as China equities and fixed income, said Sebastien Galy, senior macro strategist at Nordea Asset Management.

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