Global equity markets hit an all-time high yesterday as investors brushed off weaker-than-expected US economic data, while benchmark US Treasury yields fell to 11-month lows.
The S&P 500 hit another intraday high despite first-quarter GDP data showing the US economy contracted one per cent. Better-than-expected jobless claims reflecting a strengthening labour market and merger activity also boosted sentiment.
The dolla trimmed early losses against major currencies as traders focused on a strengthening US economy.
“Once you get beyond the headline number and look under the hood, things don't really look so bad,” said Boris Schlossberg, managing director of FX strategy at BMO Capital Markets in New York. “Inventories were to blame for a lot of it and that bodes well for the future.”
The MSCI World Index, up 1.4 per cent since the last ECB policy meeting, gained 0.2 per cent.
Wall Street's Dow Jones industrial average added 7.41 points, or 0.04 per cent, at 16,640.59. The Standard & Poor's 500 Index was up 3.89 points, or 0.20 per cent, at 1,913.67. The Nasdaq Composite Index was up 10.74 points, or 0.25 per cent, at 4,235.82.
European shares held near multi-year highs, with the pan-European FTSEurofirst 300 index closing up 0.1 per cent at 1,379.05, within a whisker of a near six-year high of 1,380.52 reachedthis week.
The euro, which had fallen around two per cent against the dollar over the same period, consolidated just above a three-month low of $1.3584.
Yields on benchmark 10-year Treasuries last traded at 2.441 per cent. The yield on 30-year bonds was near 3.273 per cent, an 11-and-a-half-month trough.
The bond market is priced in for a pretty weak economy already
“The bond market is priced in for a pretty weak economy already. Everybody knew it was going to be a contraction even though it’s a bigger drop than what they had thought. There’s not more room for yields to move lower,” said Craig Dismuke, chief economic strategist at Vining Sparks in Memphis, Tennessee.
Gold extended losses to a third straight session, hitting 16-week lows as the dollar hovered near a two-month high, while weak physical demand in top buyer China also weighed.
Spot gold fell to $1,251.50 an ounce – its lowest since Febryary 4 – in early trade and was down 0.4 percent at $1,253.33. It dropped nearly three per cent over the past two sessions.
Oil rose on signs of stronger demand from top oil consumer the US. Brent was up 44 cents at $110.25 a barrel after losing 21 cents on Wednesday. US crude oil gained $1.07 to $103.79.