Record breaking week for global markets

Global stocks closed out a record-breaking week on a muted note as US Treasuries continued to rebound with participants adopting a more cautious stance ahead of a long weekend break in the US.

Equity markets grabbed the headlines this week as the global FTSE All-World index hit a record high, surpassing the previous peak set in May 2015. This high came as Wall Street’s main indices registered four successive closing records, reflecting renewed optimism about the prospects for the US economy under the Trump administration.

US economic data this week generally came in stronger than expected — notably inflation, retail sales and regional manufacturing reports — while Mr Trump once again promised significant tax reforms. Such optimism helped equity bulls shrug aside a warning from Janet Yellen, chair of the Federal Reserve, that it might be “unwise” for the central bank to wait too long before raising interest rates again.

The pan-European Stoxx 600 index was up 0.8% for the week, while in New York, the S&P 500 was up 1.2% from a week earlier — after setting a record close of 2,349.25 on Wednesday.

The mood was sour on Friday in Asia. Japan’s Topix lost 0.4% after shares in Toshiba dropped once again, bringing the company’s market capitalisation nearly 25% lower for the week as problems at the group’s nuclear division continued to rattle investors. The FTSE Asia Pacific index, on Thursday hit a 19-month high, but fell 0.3% on Friday.

Late in the week Government bonds recovered from a sell-off earlier in the week, with the yield on the 10-year US Treasury was down another 3 basis points on Friday at 2.42%, after briefly climbing above 2.5% on Wednesday. The equivalent-duration Bund yield fell 5bp to 0.30%, while that on the 10-year UK gilt shed 5bp to 1.21%.

Oil prices were finishing the week on a mixed note, with Brent crude down 0.2% at $55.54 a barrel but US West Texas Intermediate was up 0.1% at $53.41. Copper too ended the week lower by 0.7% per cent in London to $5.960 a tonne after hitting a 21-month high above $6,200 last Monday, while gold was down $1 at $1,237 an ounce.