Stocks extend rally in Asia on confidence in global economic growth

Momentum in US tech shares lifts global markets

Photograph: iStock

Photograph: iStock

 

A global stocks rally extended its run in Asia Thursday on confidence the global economic expansion remains intact and continuing momentum in US technology shares. Treasuries held losses, with 10-year yields just under 3 per cent.

Equities gained from Tokyo to Sydney after the S&P 500 Index rose for a fourth consecutive day and the Nasdaq Composite Index chalked up another record high.

The dollar slipped, on course to fall for a third day out of four. Record American exports helped shrink the US trade deficit in April, data showed Wednesday, underscoring forecasts for robust second-quarter growth. The Australian dollar dropped as the nation’s trade surplus shrank more than economists forecast.

Under pressure

European markets had come under pressure, with the region’s bonds sinking and stocks fluctuating on signs that the European Central Bank is ready to discuss an end to quantitative easing. The return of risk appetite comes as investors get used to the on-again, off-again threat of protectionism. They’ll now look ahead to the Group of Seven meeting this week for further developments on the trade front, as well as to this month’s meetings of both the Federal Reserve and the European Central Bank for more clues on monetary policy. ECB chief economist Peter Praet on Wednesday confirmed next week’s gathering will be pivotal for a decision on when to end its bond-buying program, sinking the region’s bonds.

The renewed rally in global stocks has revived warnings in some quarters that investors are ignoring risks ranging from central banks’ shift to quantitative tightening to trade tensions and excess American borrowing.

“It’s the most insanely overpriced market since March 2000,” David Stockman, US budget director in the Reagan administration, said on Bloomberg Television. He said stock buybacks have created an artificial support for US equities.

Elsewhere, oil pared losses from a US government report showing a surprise increase in domestic crude stockpiles. Indian bond yields jumped after the Reserve Bank of India raised its key rate for the first time since 2014.