LONDON (Reuters) - The record-breaking run on world markets shows few signs of ending, with MSCI’s all-country index up almost 2.5% for the first three weeks of the year and at all-time highs along with Wall Street and European benchmark equity indices.
With the world awash in central bank liquidity and cheap money and a trade truce in place between Washington and Beijing, the economic numbers are starting to respond.
Aggregate economic surprise indices for the G10 developed economies and the emerging markets are in positive territory again, with the former at its most positive since September and the latter at it highest since May.
The International Monetary Fund updates its World Economic Outlook later today before the annual Davos forum.
This week’s central bank meetings in the euro zone, Japan, Canada, Norway, Malaysia and Indonesia will only underline the persistence of easy money for many months to come yet.
The fourth-quarter earnings season has started off better than forecast in the States, with some of the big technology names reporting this week – Netflix, Intel and Texas Instruments among others. European fourth-quarter earnings reports are getting underway.
Another series of records on Wall Street on Friday spilled over into Asia trading on Monday, although U.S. markets are closed later for Martin Luther King Day.
Shanghai led the way with gains of 0.6%. and China’s offshore yuan reached its best levels since July. But, yuan aside, the dollar was stronger across the board, bolstered by robust U.S. economic data and the stock market’s performance.
Euro/dollar fell back below $1.11 on Friday and remains there. Oil prices rose to their highest in more than week on Monday, with Brent just shy of $66 per barrel. Two large production bases in Libya began shutting down amid a military blockade, potentially reducing the country's crude flows to a trickle.
The UK and sterling remain something of an outlier in the global picture. Money markets put the chances of a UK interest rate cut as soon as Jan. 30 as high as 60% after a string of poor economic numbers and re-emerging fears of a "hard Brexit" at the end of 2020.
UK finance minister Sajid Javid unnerved businesses by saying the UK would not align with EU rules in the upcoming post-Brexit trade negotiations. Sterling slipped back below $1.30 on Monday for the first time in a week. The UK economic surprise index is at its most negative since July.
In European corporate news, Fevertree dropped 20% after it said it was hurt by subdued Christmas trading in Britain. Intu Properties fell 4% after it said it is targeting an equity increase in a bid to strengthen its balance sheet.
France’s Iliad began a 1.4 billion capital increase to finance a share buyback and French hotels group Accor said it was opening a 300 million-euro buyback programme. Anglo American announced a deal to buy Sirius Minerals for 404.9 million pounds.
China’s Guoxuan confirmed it was in talks with Volkswagen but said there was no binding deal yet. Czech businessman Daniel Kretinsky and his junior partner Patrik Tkac said on Monday they had raised their stake in debt-laden retailer Casino.
— A look at the day ahead from EMEA Markets Editor Mike Dolan. The views expressed are his own —