MSCI’s win streak hit by Japan, Europe
london — Another impressive record for world stocks was hanging in the balance on Thursday, as a late blow-out in Japan and a subdued start in Europe threatened to spoil the longest winning streak for MSCI’s global index since 2003.
Japan’s Nikkei saw a 2 per cent swing down after hitting its highest since 1992 and most of Europe’s main bourses drifted in and out of the red after mixed earnings and as Brexit talks resumed with low expectations in Brussels.
There were a series of ECB speeches and what should be buoyant new growth forecasts due later from the European Commission, though bond markets were mostly quiet following a rally this week in benchmark US Treasuries and Bunds .
Germany’s 10-year bond yield edged up for the first time in over a week and the euro and pound were both higher as the long-running saga of US tax reforms weighed on the dollar.
Oil and Middle Eastern stock and bond markets also steadied after a nervy few days caused by a purge of royals and top officials by Saudi Arabia’s crown prince.
“The stock market has run out of a little momentum since the blow-out on the (Japanese) topix so it feels like it’s temporarily paused,” said Societe Generale strategist Kit Juckes. “We are wait- ing for some news from the Republicans on the tax plans, there is a bond market that has stalled and we’ve got rather soggy looking emerging markets... We probably need to get US Treasury yields higher to get things going again.” MSCI’s all-country equity index is clocking year-to-date gains of almost 19 per cent.
But as a measure of relative calm of the current bull market and a reflection of the low volatility environment that has dominated all year, none of the latest 11 daily gains have exceeded half a per cent and more than half of them were less than 0.1 per cent. —