U.S. spending boom offsets Europe's lockdown blues
LONDON (Apr 1) - World stocks ran higher on Thursday following their slowest quarter in a year, as U.S. economic strength offset the return to strict COVID lockdown measures in parts of Europe and elsewhere.
U.S. President Joe Biden's sweeping $2.3 trillion plan to rebuild America's crumbling infrastructure lifted MSCI's 50-country world index for a second day running, while oil jumped 1.5% before an OPEC meeting.
Asian markets had seen a strong finish with a late burst pushing Chinese shares up 1.2%, and Europe's STOXX 600 shrugged off France's new lockdown order to push back towards its pre-COVID record highs.
The euro edged up, too, and euro zone bond yields held their ground, as the European Central Bank's chief economist reiterated that the ECB had no intention of curbing its support despite rising inflation.
IHS Markit's Manufacturing Purchasing Managers' Index (PMI) showed euro zone factory activity rising at its fastest pace in the survey's near 24-year history, although lockdowns and supply chain issues may soon rein it in.
Inflation data on Wednesday had shown euro zone inflation accelerated to 1.3% in March from 0.9% a month earlier.
"The biggest question, the million-dollar question now, is where is the landing zone for inflation," said Geraldine Sundstrom, an asset allocation portfolio manager at PIMCO.
"Will it feed on itself or will it come back to a comfortable level ... this is the thing that will drive the central banks in whether they take away the punch bowl or not."
Wall Street futures pointed to early gains for the S&P 500 and other major U.S. markets, while benchmark 10-year U.S. Treasuries were sat at 1.76%, having started the year at just over 0.9%.
The dollar consolidated its healthy 3.5% first-quarter gain, though it didn't seem ready to go anywhere fast.
The euro changed hands at $1.1720, after hitting a near five-month low of $1.1704. Against the British pound, the common currency was flat after hitting a 13-month low of 0.85025 pound.
President Emmanuel Macron ordered France into its third national lockdown on Wednesday while the euro zone lagged the United States and Britain in vaccination programmes.
"As long as the news flow on either side of the Atlantic is more or less diametrically opposed, there is really not much to be said in support of the euro," Commerzbank analyst Antje Praefcke wrote to her clients.
Reuters
