World stocks climbed and equity volatility neared a record low on Monday, December 11, as investors focused on signs of strong economic growth ahead of a slew of central bank rate decisions, while the launch of bitcoin futures fed the market’s cryptocurrency obsession.
European stocks drew strength from a positive Asian session to trade higher across the board in early deals, nearing four-week highs as bank stocks boosted benchmarks.
MSCI’s main European Index .MSER rose 0.1 percent while the index of leading European companies .STOXX50 gained 0.2 percent. Britain’s FTSE climbed 0.6 percent thanks to a boost from a weaker sterling.
World stocks rose, flirting with their most recent record highs, boosted by more benign Asian trading after Friday’s strong U.S. employment data and Chinese trade figures cemented optimism on the global economy.
Global stocks .MIWD00000PUS rose 0.3 percent to 505.35, nearing last week’s intraday record of 507.09.
“Momentum behind stock markets has been pretty solid, supported in part by good numbers on the economic front and not bad earnings. I don’t see anything happening right now that could break the momentum,” said Daalder.
Currency and bond markets were cautious ahead of a big week of policy meetings globally, although the Federal Reserve is the only major central bank expected to raise interest rates.
The Bank of England and the European Central Bank are widely seen holding rates steady.
“Global growth has strengthened but there is very little evidence yet that inflation pressures are picking up, which continues to favor only a gradual pace of monetary policy normalization,” Lee Hardman, strategist at MUFG, told clients.
Sluggish U.S. wage growth and inflation have sparked some concern over rate rises, and traders will zoom in on the Fed’s future rate projections on Wednesday.
“It’s a tall order for the median Fed dots to shift lower, but we may see a slight downshift in the distribution,” said ING forex strategists in a note, adding that the dollar index could fall back below 93 as the Fed’s 25bp rate rise is already priced in.
Data out on Friday showed average hourly earnings in the United States came in lower than economists forecast, despite stronger-than-expected non-farm payrolls, which rose by 228,000 in November.
Most high-grade euro zone bond yields were lackluster in early trading, with 10-year Bund yields, the benchmark for the region, edging below 0.30 percent. DE10YT=TWEB
“Bunds have drifted lower in recent weeks,” said Robeco’s Daalder. “I would say there’s some complacency for sure, but I don’t see any major moves until the new year.”
The gap between U.S. and German bond yields came close to its widest since April as the monetary policy paths of the two central banks diverged, Reuters reports.
