Stocks approach record high on U.S. infrastructure bill, oil surges

  • The MSCI world index up 0.13% on the day, more than 2% on the week
  • Oil on track for 5th weekly gain
  • European stocks advance 0.1% to recent highs

LONDON, June 25 (Reuters) – Global stocks hit record highs on Friday after US President Joe Biden passed a bipartisan Senate infrastructure deal, raising hopes of a prolonged rebound in the largest economy the world, and tight supply prospects have boosted oil.

Investors turned to an infrastructure deal to prolong the US recovery after massive fiscal stimulus helped the US economy grow at an annualized rate of 6.4% in the first quarter. The plan is valued at $ 1.2 trillion over eight years, including $ 579 billion in new spending. Read more

“The positive tone of the market recognizes the potential growth benefits of the trade-off, but the small size tempers some of the tax implications to pay for it,” said Kerry Craig, global market strategist at JP Morgan Asset Management.

The MSCI All Country Index (.MIWD00000PUS) rose 0.13%, approaching a record high on June 15 and taking the week’s gains to over 2%.

European stocks (.STOXX) rose 0.1% to record highs reached this month, after the S&P 500 (.SPX) gained 0.58% and the Nasdaq Composite (.IXIC) added 0 , 69%, bringing both indices to record closings. The Dow Jones Industrial Average (.DJI) rose 0.95%.

The German DAX (.GDAXI) was stable and the UK FTSE index (.FTSE) was up 0.14%.

Global monetary and fiscal stimulus in response to the COVID-19 pandemic are boosting financial assets, despite an uneven pace of recovery across regions, said Eddie Cheng, head of international multi-asset portfolio management at Wells Fargo Asset Management.

“Bonds go up, stocks go up, commodities go up – it’s a very liquidity-driven market,” Cheng said.

Oil prices climbed for a third straight session and were on track for a fifth straight weekly gain as demand growth is expected to outstrip supply on bets that OPEC + producers will be cautious in the return of more production to the market from August.

U.S. West Texas Intermediate crude rose 0.2% to $ 73.40 a barrel and global benchmark Brent crude was at $ 75.70, up 0.19% on the day.

The two benchmark contracts were settled on Thursday at their highest levels since October 2018.

Getting a bipartisan deal on the infrastructure deal forced Biden to sacrifice some of his ambitions on schools, climate change mitigation and support for parents and caregivers, as well as increasing taxes on the rich and on businesses. Read more

But alongside growth expectations, markets are also worried about inflation.

The core personal consumption expenditure index, an inflation indicator closely followed by the Federal Reserve, is expected to post annual gains of 3.4% later on Friday.

Benchmark 10-year U.S. Treasuries, whose yields fell after the infrastructure bill was announced, were last at 1.4901%, from a close of 1.487% on Thursday.

The German 10-year yield, the benchmark for the euro zone, was little changed at -0.179%.

In the currency market, the dollar index lost 0.12% to 91.73 as investors continued to weigh on the likelihood of a Fed tightening in the face of persistent inflation.

The Japanese yen held steady at 110.76 and the euro gained 0.13% to $ 1.1946.

In Asia, the largest MSCI index of Asia-Pacific stocks excluding Japan (.MIAPJ0000PUS) rose nearly 1%, and Chinese blue chips (.CSI300) rose 1.63%.

The Hong Kong Hang Seng (.HSI) gained 1.4%, the Seoul Kospi (.KS11) rose 0.51%, and Australian stocks (.AXJO) climbed 0.45%. The Japanese Nikkei (.N225) rose 0.66%.

Spot gold rose 0.35% to $ 1,781.55 an ounce, on track for its first weekly rise in four.

Additional reporting by Tom Westbrook in Singapore; Editing by Ana Nicolaci da Costa, Kim Coghill and Timothy Heritage

Our Standards: Thomson Reuters Trust Principles.

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