SPY386.54-3.04 -0.78%
DIA314.19-1.40 -0.44%
IXIC13,358.79-230.04 -1.69%

GLOBAL MARKETS-Global equities markets rise on better outlook, dollar gains

· 02/04/2021 15:20
GLOBAL MARKETS-Global equities markets rise on better outlook, dollar gains

Adds oil, gold settlement prices

MSCI's all-country world index gains 0.43%

Oil approaches one-year high on OPEC+ output cut

Benchmark bond yields rise, dollar also gains

By Herbert Lash and Marc Jones

- Global equities rose for a fourth day of gains on Thursday as signs of a stable U.S. labor market, a revitalized dollar and rising bond yields turned attention to economies on the mend rather than the recent trading feud sparked by retail investors.

Longer-term U.S. Treasury yields rose in anticipation of a large pandemic relief bill from Washington, while the dollar climbed toward a fifth-straight daily gain on a possibly stronger-than-expected U.S. jobs report on Friday.

Expectations of more stimulus, low interest rates and news that British researchers plan to use the Pfizer PFE.N and AstraZeneca AZN.L vaccines to find ways to reduce coronavirus variants are pushing equities higher, said Rick Meckler, a partner at Cherry Lane Investments in New Vernon, New Jersey.

"Extremely low interest rates that continue despite heavy government spending and deficits are leaving investors with a feeling it's slanted toward an upward market," he said.

On Wall Street, the Dow Jones Industrial Average .DJI rose 0.92%, the S&P 500 .SPX gained 0.87% and the Nasdaq Composite .IXIC added 0.91%.

Weekly U.S. jobless claims showed at least 17.8 million Americans received benefits in mid-January, suggesting long-term unemployment was entrenched and could boost President Joe Biden's push for Congress to pass his $1.9 trillion relief bill. nL1N2K92L7

MSCI's benchmark for global equity markets .MIWD00000PUS rose 0.43% to 665.81.

The main indexes for bourses in London, Frankfurt and Paris edged up, helped by an agreement late Wednesday by Germany's ruling coalition on additional measures to support those hit hard financially by the pandemic. The pan-European FTSEurofirst 300 index .FTEU3 closed up 0.60% and Germany's DAX .GDAXI rose 0.91% to one-month high.

The British pound GBP=D3 dived as much as half a percent on the possibility the Bank of England would endorse negative interest rates. But sterling turned positive after the bank indicated it would not take that position for at least six months, if at all. nL1N2KA0T6

Sterling GBP= was last trading at $1.3668, up 0.18%.

Hopes that the COVID-19 pandemic can be brought to heel by extensive vaccination programs, combined with expectations of unswerving global economic stimulus, have led the bond market to focus on rising government debt and potential inflation.

The dollar index =USD rose 0.509%, with the euro EUR= down 0.59% to $1.1963. The Japanese yen JPY= weakened 0.46% versus the greenback at 105.50 per dollar.

The 10-year U.S. Treasury US10YT=RR note rose about 1 basis point to 1.1392%, while Germany's 30-year government bond yield DE30YT=RR climbed back in positive territory at 0.006% for the first time since September.

Market gauges of future euro zone inflation were at their highest since May 2019, while the gap between two- and 10-year Treasury yields, at more than 100 basis points, was the widest in almost three years. That is seen as a another key indicator of an approaching economic recovery. EUIL5Y5Y=R

Markets eased a bit overnight in Asia. MSCI's ex-Japan Asian-Pacific index fell 0.57% .MIAPJ0000PUS, led by 1.35% and 0.44% drops in South Korea .KS11 and China .SSEC.

Japan's Nikkei .N225 lost 1.1%, ending a three-day winning streak.

Gold dropped more than 2% to break below the key $1,800 psychological level as a jump in the dollar and U.S. Treasury yields eroded bullion's appeal. U.S. gold futures GCv1 settled down 2.4% at $1,791.20 an ounce.

Silver XAG= dropped 2.3% to $26.26 an ounce.

Oil rose on strong U.S. economic data, falling inventories and a decision by the Organization of the Petroleum Exporting Countries and producer allies to stick to its output cuts. But a stronger dollar limited price gains.

Brent crude futures LCOc1 settled up 38 cents at $58.84 a barrel. U.S. crude futures CLc1 added 54 cents to settle at $56.23 a barrel.

Global assetshttp://tmsnrt.rs/2jvdmXl

Global currencies vs. dollar http://tmsnrt.rs/2egbfVh

Emerging marketshttp://tmsnrt.rs/2ihRugV

MSCI All Country World Index Market Caphttp://tmsnrt.rs/2EmTD6j

Markets have rebounded strongly since COVID shockhttps://tmsnrt.rs/3cH3yEy

(Additional Reporting by Sujata Rao in London and Hideyuki Sano in Tokyo; Editing by Kirsten Donovan, Alexander Smith and Dan Grebler)

((marc.jones@thomsonreuters.com; +44 (0)20 7513 4042; Reuters Messaging: marc.jones.thomsonreuters.com@reuters.net Twitter @marcjonesrtrs))