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World stocks scale fresh peaks on strong China, U.S. data

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Herbert Lash and Simon Jessop
·3 min read
The German share price index DAX graph is pictured at the stock exchange in Frankfurt
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By Herbert Lash and Simon Jessop

NEW YORK/LONDON (Reuters) - Gold prices edged up and global stocks scaled fresh highs on Friday after strong U.S. and Chinese economic data bolstered expectations of a solid global recovery from the coronavirus pandemic.

Government stimulus, strong corporate earnings from U.S. banks and in Europe, along with signs of economic recovery in countries leading the COVID-19 vaccination race have all helped push key stock market indexes to new heights this week.

MSCI's broadest gauge of world stocks rose 0.33%, lifted by surging European shares and less solid gains on Wall Street, where high-flying tech stocks took a breather from a rally that analysts say still has legs.

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

"The backdrop for stocks to continue higher is in place," Arone said. "Investors and market participants continue to underestimate both the economic and earnings recovery."

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 closed up 0.90% at a new peak, while Germany's DAX gained 1.3% to hit an all-time high and the UK's FTSE 100 rose 0.5% to close at more than one-year highs.

On Wall Street, the Dow Jones Industrial Average rose 0.25% and the S&P 500 gained 0.20%, both setting new highs. The Nasdaq Composite eased 0.02%.

German car and truck maker Daimler rose 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 slightly undershot expectations. Retail sales bounced strongly last month.

Asian markets rallied overnight on the news. MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.4% and Shanghai shares added 0.8%. Japan's Nikkei edged 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.

Gold prices rose to a seven-week high, on track for their best week since mid-December, as retreating U.S. Treasury yields and a softer dollar bolstered the metal's appeal.

Spot gold prices rose $13.75 to $1,776.96 an ounce.

The dollar slid to a 4-week low against a basket of currencies after the sharp drop in Treasury yields on Thursday, as investors increasingly accepted the Federal Reserve's vow to keep an accommodative policy stance for longer than expected.

The dollar index fell 0.096%, with the euro up 0.1% to $1.1977. The Japanese yen weakened 0.04% versus the greenback at 108.80 per dollar.

The yield on U.S. 10-year Treasuries rose to 1.5816%, pulling back from multi-week lows hit the prior session.

Oil was modestly lower on Friday after a week of gains built on strong economic figures from the United States and China that offset concerns about rising COVID-19 infections in other major economies.

Brent crude futures fell $0.12 to $66.82 a barrel. U.S. crude futures were down $0.28 to $63.18 a barrel.

(Reporting by Herbert Lash, additional reporting by Simon Jessop in London; Editing by Larry King, Kirsten Donovan)