World stocks were pushed to new record high on Thursday, December 28, following buoyant commodity prices alongside a pullback in U.S. bond yields and the dollar, signaling the rally would likely extend into 2018.
MSCI’s world equity index .MIWD00000PUS, which tracks shares in 47 countries, has risen about 22 percent this year and looks set for a record 14th straight month of gains.
U.S. stock futures too rose, indicating a stronger day ahead on Wall Street ESc1 1YMc1 NQc1.
This year’s equity rally has been led by the bumper performance in Asia, which is on track for its best year since 2009, with MSCI’s index of Asia-Pacific shares outside Japan .MIAPJ0000PUS approaching late-2007 highs.
Equity markets have fed off this year’s recovery in world trade and economic growth, which have in turn lifted company earnings and commodity prices, with copper futures at new four-year highs CMCU3 for an annual gain of over 30 percent.
Traders anticipate the equity rally continuing into next year, especially if U.S. tax cuts further boost growth in the world’s largest economy.
Another tailwind for world stocks is the fact that U.S. tax cuts, which will lead to significantly higher borrowing in coming years, have not so far translated into higher borrowing costs.
In fact, U.S. 10-year Treasury yields have retreated after briefly last week breaking above the key 2.50 percent level, falling as much as seven basis points on Wednesday.
Two-year yields too are off nine-year highs US10YT=RR US2YT=RR after showed U.S. consumer confidence tumbling from 17-year highs.
Emerging equities surged almost one percent to approach one-month highs .MSCIEF. The index is up 34 percent this year.
