World stocks hit 1-1/2
year high after strong China data
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[January 05, 2017]
By Abhinav Ramnarayan
LONDON
(Reuters) - World stocks hit their highest level since mid-2015 on
Thursday after strong Chinese data added to the optimism about global
growth and inflation that has been driving markets since the start of
the new year.
Growth in China's services sector accelerated to a 17-month high in
December, a private sector survey showed, adding to upbeat factory and
service sector surveys out of the United States, Europe and Asia
released this week.
In addition, minutes from the U.S. Federal Reserve's December meeting
showed that many of the central bank's policy makers are expecting a
pick-up in economic growth and inflation in the world's biggest economy
as a result of fiscal, regulatory or other policies.
The MSCI world equity index <.MIWD00000PUS>, which tracks shares in 46
countries, was up 0.4 percent at one stage to hit its highest level
since July 2015. At that level it was up over 1.5 percent for the year
so far.
The index was pushed up by Asian shares, which rose for the eighth
consecutive day on Thursday
European shares held steady near recent highs.
"While I am always cautious about December data because of seasonal
factors, we certainly have seen across the board positive PMI data in
Japan, China and the UK as well this morning," said Investec economist
Victoria Clarke.
Britain's economy finished 2016 strongly, growing at the fastest rate
since mid-2015, an industry survey showed on Thursday.
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"TRUMP MOMENTUM"
Stocks and bond yields have been rising ever since the election of
Republican Donald Trump as U.S. president on expectations that fiscal
stimulus will boost growth and inflation. Trump's inauguration takes
place on Jan. 20.
"There seems to be a continuation of the Trump momentum we saw in
December, and this promises to be the prevailing mood until we get into
the detail of what Trump will actually do and the battles he may have
with Congress," said Investec's Clarke.
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A stock quotation board displaying Japan's Nikkei average is seen
before a ceremony marking the end of trading in 2016 at the Tokyo
Stock Exchange (TSE) in Tokyo, Japan December 30, 2016. REUTERS/Toru
Hanai
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The minutes of the U.S. Federal Reserve's December meeting showed that
policymakers were keen to emphasize the uncertainty of the outlook even
while anticipating better growth and inflation for the U.S. economy.
"The FOMC's minutes to its Dec meeting released post yesterday's
European close could best be characterized as perhaps tilted toward the
hawkish side but tempered by a heavy dose of uncertainty," said Rabobank
strategist Richard McGuire.
"All the policymakers emphasized the uncertainty of the outlook,
reminding investors that the outlook is more nuanced than the market
seems to think," he said.
With just two weeks to go before Trump takes over, investors and
policymakers are waiting to see if his actions match his rhetoric and if
his policies will be approved by Republican lawmakers.
The dollar extended its losses on Thursday, falling 0.42 percent against
a basket of six major currencies - though still near the 14-year high
hit on Tuesday - following losses against the Chinese yuan.
China stepped into both its onshore and offshore yuan markets to shore
up the faltering yuan for a second day on Wednesday, sparking
speculation that it wants a firm grip on the currency ahead of Trump's
inauguration.
(Additional reporting by Saikat Chatterjee; Editing by Gareth
Jones)
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