Global equities surge on factory data, stimulus hopes

NEW YORK (Reuters) – Global equity markets surged on Thursday, with U.S. and European benchmark stock indexes setting record highs, on the back of the strongest manufacturing data around the world in decades and a drop in bond yields that lifted big tech shares.

FILE PHOTO: The front facade of the New York Stock Exchange (NYSE) is seen in New York City, U.S., March 29, 2021. REUTERS/Brendan McDermid

U.S. President Joe Biden’s sweeping $2.3 trillion plan to rebuild America’s crumbling infrastructure added to investor enthusiasm, as did accelerating vaccine rollouts.

The dollar fell, easing off nearly three-year highs in the first quarter, while oil rose before a meeting of the Organization of Petroleum Exporting Countries and allies that was expected to keep supply tight.

Asian markets ended with a late burst pushing Chinese shares up 1.2%, while Europe’s STOXX 600 shrugged off France’s new lockdown order to close in on its pre-COVID record highs.

Germany’s DAX index scaled a new high after IHS Markit’s Manufacturing Purchasing Managers’ Index (PMI) showed euro zone factories seeing their fastest pace on growth in the survey’s near 24-year history.

On Wall Street, the S&P 500 also touched a new high as it charged past the 4,000 mark after the Institute for Supply Management said its index of national factory activity soared to its highest level in more than 37 years in March.

There are multiple tailwinds – stimulus, expectations of record earnings, vaccines – driving stocks higher, said King Lip, chief investment strategist at Baker Avenue Asset Management in San Francisco.

“With stimulus, with the Fed committed to being dovish, with the economy reopening due to more of the U.S. getting vaccines, overall you’re going see corporate earnings do pretty well.”

MSCI’s benchmark for global equity markets rose 0.93% to 679.55, while Europe’s broad FTSEurofirst 300 index closed up 0.59%.

On Wall Street, the Dow Jones Industrial Average rose 0.46%, the S&P 500 gained 0.91% and the Nasdaq Composite added 1.48%.

The dollar eased a bit after a 3.5% first-quarter gain. The dollar index fell 0.295%, with the euro up 0.35% to $1.1769. The Japanese yen strengthened 0.13% versus the greenback at 110.55 per dollar.

Graphic: U.S. yields and inflation

Higher-than-expected weekly jobless claims pushed U.S. Treasury yields lower, flattening the yield curve, but did little to dampen investor expectations of Friday’s monthly employment report.

The Labor Department said the number of Americans filing new claims for unemployment benefits unexpectedly rose last week. The jobless claims number wasn’t as great as everyone had hoped, but halted the recent rise in bond yields, Lip said.

“A little bit of a slowdown is going to be an improvement on rates,” he said.

The 10-year U.S. Treasury note fell 7.1 basis points to 1.6752%.

Brent crude futures rose $1.01 to $63.75 a barrel. U.S. crude futures gained $1.15 to $60.31 a barrel.

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