World share markets hovered just below all-time highs yesterday as investors drew encouragement from a rally in China, while Russian stocks enjoyed some respite after three days of heavy selling.
Investors remained cautious, however, reflecting geopolitical jitters and the torrent of US economic news due this week, including a Federal Reserve meeting, GDP data today and non-farm payrolls on Friday.
Wall Street was little changed, erasing earlier gains built on news about a spinoff in the telecommunications sphere that sent most stocks in the sector soaring and on better-than-expected results from Dow components Pfizer and Merck.
The Dow Jones industrial average rose 4.28 points or 0.03 per cent, to 16,986.87.
The S&P 500 lost 1.25 points or 0.06 per cent, to 1,977.66 and the Nasdaq Composite added 8.58 points or 0.19 per cent, to 4,453.49.
The US dollar hit fresh eight-month highs against the euro and rose slightly against the yen and Swiss franc as traders awaited US economic data and a potentially more hawkish tone from the Fed.
Analysts said the Fed, which is expected to cut its monthly bond-buying programme by another $10 billion after its two-day meeting ends today, may hint at an approaching interest rate hike in light of US labour market growth.
US Treasuries prices increased, helped by record low yields on German government bonds, and the US yield curve flattened to five-year lows before a sale of new five-year notes.
The debt pared gains, however, after US consumer confidence jumped in July to its highest since October 2007.
Ten-year German government bond yields, the benchmark for eurozone borrowing costs, hit record lows of 1.12 per cent amid the prospect of a fresh round of long-term loans to banks from the European Central Bank.
Rouble-traded Russian stocks gained despite fresh fighting in Ukraine and expectations of more EU sanctions. The dollar-denominated RTS index, however, was down slightly to its lowest in nearly three months.
An index of European shares rose 0.3 percent.
“The initial fear [of Russia/West tensions] is not really there any more,” said Rabobank economist Philip Marey.
“So now we are looking at the usual suspects: how strong is the euro on recovery? How strong is the US recovery? And what does it mean for the central banks?”
EU diplomats will try to forge an agreement on the final shape of measures to target capital markets, defence and sensitive technologies key to some of Russia’s major industries.
China shares continued their charge overnight, led by banks after the country’s fifth-biggest bank by assets said it was studying a plan to sell stakes to private investors. The CSI300 index of leading Shanghai and Shenzhen A-shares added 0.3 per cent, its eighth gain in a row, lifting it to a 2014 high.
That, in turn, pushed MSCI’s emerging market index to a three-year high and kept the All World benchmark within reach of this month’s all-time peak.