Global equities pushed to record highs and Treasuries rallied following the release of upbeat economic data in the US and reassurances that the Federal Reserve would continue to support financial markets.
US retail sales in March rose by the most in 10 months while the number of Americans filing for new unemployment benefits fell by 193,000 last week to 576,000, beating economists’ expectations for 700,000 new claims.
The FTSE All-World index of developed and emerging market equities rose 0.8 per cent to a record, with stock markets also buoyed by strong quarterly results. Wall Street’s S&P 500 and tech-focused Nasdaq Composite were both up more than 1 per cent at lunchtime in New York, with the broader blue-chip benchmark hitting a fresh high.
The upswing in stocks came as US government debt rallied, with the yield on the 10-year US Treasury sliding 0.09 percentage points to 1.54 per cent in its steepest daily drop since November last year.
The moves in stocks come during what is shaping up to be a bonanza earnings season for US banks and asset managers. Bank of America on Thursday produced quarterly results that beat analysts’ forecasts and announced a $25bn share buyback. Fund manager BlackRock revealed its assets under management had swelled to a record $9tn, exceeding analysts’ revenue estimates. These updates followed strong results on Wednesday from Goldman Sachs.
Supportive language from the Fed also lifted investor sentiment. On Wednesday evening, Fed chair Jay Powell told the Economic Club of Washington DC that the central bank would maintain its asset purchase programme until “substantial progress” had been made towards full employment in the US.
“We will reach the time at which we will taper asset purchases when we have made substantial further progress towards our goals from last December,” Powell said in comments reported by Reuters.
In Europe, the regional Stoxx 600 index closed up 0.5 per cent, eclipsing last week’s peak, while London’s FTSE 100 index rose 0.6 per cent and Frankfurt’s Xetra Dax climbed 0.3 per cent.
While some investors were concerned that the mood has become too bullish, a lack of money-making alternatives would continue to support stock markets, said Patrick Spencer, vice-chair of equities at investment bank RW Baird.
“Yes there are four bulls out there for every bear,” he said, “but where else are you going to put your money?”
Real yields on 10-year and 20-year government Treasuries, which reflect returns adjusted for inflation, were below zero, Spencer pointed out. The earnings yield on the S&P 500, he added, remained in excess of 2 per cent.
The dollar, as measured against a basket of currencies, was flat. Brent crude, the international oil benchmark, climbed 0.4 per cent to $66.80 a barrel, its highest level in almost a month after the Paris-based International Energy Agency lifted its demand forecast for this year.