World stock markets ride earnings to a fresh record peak, dollar holds

Strong corporate profits have eased concerns over the COVID-19 pandemic, as vaccine roll-outs continue apace in developed markets, despite a resurgence of cases in Asian countries

Global shares rode earnings to a record high on Wednesday, while the dollar and Treasury yields languished in the wait for US employment data to provide clues to the pace of monetary tightening in the world’s biggest economy.

Strong corporate profits have eased concerns over the COVID-19 pandemic, as vaccine roll-outs continue apace in developed markets, despite a resurgence of cases in Asian countries including China.

While that has helped buoy equities, inflationary pressures and a growing belief the US Federal Reserve may soon signal its intention to trim support to the economy continue to cause a tussle with the bond market over the mid-term direction.

“Macro data is coming at high expansionary levels but currently all the market is seeing is peak data. It wants to know what’s going to be the glide path over the next 12 months. Those concerns are playing out in the bond market,” said Grace Peters, EMEA head of investment strategy at JP Morgan Private Bank.

“When it comes to the equity markets, you have more balance, as lower yields support equities, especially the growth part of the equity market. At the same time, there is strong bottom-up evidence that life is good for corporates.”

The MSCI World index, a broad gauge of equity markets, was last up 0.2%, tracking overnight gains in Asia, where the equivalent index, excluding Japan rose 1%.