World markets steadied yesterday after a volatile week driven by speculation over shifts in US monetary policy, with equities around the globe on the rise and the euro up against the dollar, while crude oil rose on fear of supply disruptions over Crimea.
The benchmark S&P 500 index hit a record intra-day high as equities were boosted by Moscow’s assertion that no other Ukrainian region would be subject to intervention.
But Brent crude rose more than 1 percent to above $107 a barrel as US sanctions against Russia, the world’s second-largest oil exporter, kept fears of a supply disruption alive.
Brent remained on track for a fourth weekly loss, however, and President Vladimir Putin signed laws completing Russia’s annexation of Crimea yesterday.
European shares logged their biggest weekly gain in a month, supported by a rally in basic resources stocks and some positive technical buying signals.
The European basic resources index rose 1.1 per cent, extending gains on expectations China would support its economy after Premier Li Keqiang said on Thursday the world’s top metals consumer will speed up investment and construction plans to ensure domestic demand expands at a stable rate.
Early strength in Europe helped MSCI’s all-country world equity index trade up 0.33 per cent. The eurozone’s blue-chip Euro STOXX 50 index rose 0.25 per cent after a major options expiry, and the pan-regional FTS Eurofirst 300 closed up 0.28 per cent at 1,309.56.
“The elements for the continuation of the current rally are on the table. The market is not cheap but not extremely expensive either and economic growth is going to be decent,” said Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets.
“If you believe in the scenario of a gradual economic upturn, you should play the sectors that benefit from that and invest in stocks such as basic resources and banks,” he said.
A Reuters poll on Thursday forecast European stocks will extend their rally in 2014, fuelled by a long-awaited rebound in corporate profits as the region’s economy picks up and global investors shift from emerging markets to Europe.
Both the S&P 500 and the Dow were on track for a fourth day of gains this week, even though some analysts say equities are vulnerable to any escalation in US-Russian tensions.
“The path of least resistance for markets is up, and so far it doesn’t think the Ukraine issue is too big of a negative since no one really thinks that Putin will do anything too drastic,” said Michael Matousek, head trader at US Global Investors Inc in San Antonio, Texas.
“Of course if things do heat up, it would really become a headwind for markets.”