World stocks hit new high on Spain re­lief

Kuwait Times - - Business -

LON­DON: A strong rally in the tech­nol­ogy sec­tor helped drive global stocks to a record high yes­ter­day, while a re­cov­ery in Span­ish mar­kets helped to lift Euro­pean shares after an opinion poll smoothed in­vestors’ con­cerns over Cata­lan se­ces­sion. MSCI’s world equity in­dex, which tracks shares in 47 coun­tries, rose 0.2 per­cent to its high­est ever level. The in­dex has surged 17.7 per­cent so far in 2017, and is on track for its best an­nual show­ing since 2013.

Euro zone stocks climbed 0.2 per­cent, hold­ing near their high­est level in 10 years. Euro­pean stocks have ral­lied this year as a healthy econ­omy dove­tailed with con­vinc­ing growth in cor­po­rate earn­ings and a re­duc­tion in po­lit­i­cal risk. “There is an avalanche of things that are hap­pen­ing or go­ing to hap­pen, but mar­kets are just shrug­ging it off. It’s like mar­kets have been vac­ci­nated against bad news thanks to the strength of the global busi­ness cy­cle,” said Marie Owens Thom­sen, global head of eco­nomic re­search at In­do­suez Wealth Man­age­ment in Geneva.

Span­ish stocks jumped 1.5 per­cent and gov­ern­ment bor­row­ing costs fell after a week­end sur­vey sug­gested Cata­lan se­ces­sion­ists may lose their ma­jor­ity in re­gional elec­tions sched­uled for De­cem­ber. Spain’s bench­mark 10year bond yield fell 2 ba­sis points to 1.52 per­cent. Banks Caix­a­bank and Sabadell, which moved their head­quar­ters out of Cat­alo­nia due to the cri­sis, led gains on the IBEX.

The broader mar­ket showed signs of re­lief, with euro zone banks ris­ing 0.7 per­cent, and Ital­ian stocks which have been sen­si­tive to the Span­ish cri­sis - up 0.4 per­cent. Tech­nol­ogy stocks also drove Euro­pean trad­ing, rid­ing a wave of gains on the Nas­daq and in Asia after Ap­ple said pre-or­ders for its new iPhone X were “off the charts”. iPhone com­po­nent sup­pli­ers AMS, Di­a­log Semi­con­duc­tor and STMi­cro led gains.

Europe’s tech sec­tor has qui­etly boomed, and has out­per­formed the Nas­daq so far this year. US stock fu­tures pointed to a slight pull­back at the open after blis­ter­ing tech-driven gains on Fri­day. Dow Jones In­dus­trial and S&P 500 fu­tures were down 0.2 per­cent, while the tech-heavy Nas­daq was set for a 0.1 per­cent dip.

Cen­tral banks in the spot­light

In a week of pol­icy meet­ings by three major cen­tral banks, gold edged down 0.1 per­cent on in­vestor cau­tion. The Bank of Eng­land is widely ex­pected to raise rates on Thurs­day, re­vers­ing its mon­e­tary eas­ing fol­low­ing Bri­tain’s June 2016 vote to leave the Euro­pean Union, but in­vestors feared that the de­ci­sion could cre­ate more volatil­ity than the well-re­ceived stim­u­lus ex­ten­sion by the Euro­pean Cen­tral Bank last week. “This com­ing week will see whether the BoE has also man­aged to steer mar­kets in the right di­rec­tion,” said So­ci­ete Gen­erale an­a­lysts in a note.

Ster­ling rose 0.3 per­cent against the dol­lar as traders bid the cur­rency higher on the ex­pected rate rise. Other major cur­ren­cies kept to tight ranges as mar­kets also awaited in­ter­est rate de­ci­sions by the Bank of Ja­pan and the U.S. Fed­eral Re­serve.

The dol­lar fell 0.3 per­cent against a bas­ket of cur­ren­cies as in­vestors fo­cused on the im­pend­ing ap­point­ment of the next Fed­eral Re­serve chair, with spec­u­la­tion rife that Fed gover­nor Jerome Pow­ell is the fa­vored can­di­date. An an­nounce­ment is ex­pected this week. —Agen­cies

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