Steady Europe keeps stocks near record highs
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[March 13, 2024] By
Marc Jones
LONDON (Reuters) - World shares held close to record highs on Wednesday
thanks to new all-time peaks in Europe and on Wall Street, as investors
bet hotter-than-expected U.S. inflation won't stop the Federal Reserve
and other central banks from cutting interest rates.
Asian shares hit seven-month highs overnight as a number of tech sectors
made gains, but Europe went even better early on by squeezing out its
fifth record high in six sessions. [.EU]
Volatility in currency markets remained low, however, much to the
disappointment of FX dealers and despite the European Central Bank being
set to publish its highly anticipated operational framework review later
in the day.
The dollar, euro, yen and pound were all little changed on the day, and
though the yen looks ready to pounce if Japan finally raises interest
rates next week, the dollar hasn't moved by more than 1% in either
direction since November. [/FRX]
"We are in a very, very short-term, interest rate-driven market where
the overall story is a huge coalescence of expectations for rate cuts
(by the Fed, ECB and BoE) around June," Societe Generale strategist Kit
Juckes said.
"The big issue is euro-dollar, if they (Fed and ECB) are both going to
cut three times this year ... if all rates move in parallel with each
other FX has nothing to go on," he added.
![](http://archives.lincolndailynews.com/2024/Mar/13/images/ads/current/humanesociety_sda022411.png)
Benchmark U.S. and European bond market yields that tend to drive global
borrowing costs were at one-week highs after Tuesday's U.S. inflation
upside surprise.
But the risk takers were still in charge there too, with the gap between
Italian and German 10-year yields shrinking to a fresh 26-month low. [GVD/FRX]
The latest rise in Europe's stock prices was driven by the region's
retailers as solid results from Zara-owner Inditex and a 14% surge in
Zalando shares more than offset news of Adidas' first loss in 30 years
due to its Kanye West problems.
Bitcoin bustled to its third straight record high at $73,400 as
cryptomarkets continued to sizzle ahead of what is known as a 'halving'
where it effectively becomes tougher to mine the currency.
SUBDUED
Overnight, MSCI's broadest index of Asia-Pacific shares outside Japan
ended lower after touching its highest level since early August.
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![](../images/031324PIX/busine64.jpg)
The German share price index DAX graph is pictured after jumping to
a new record at the stock exchange in Frankfurt, Germany, March 13,
2024. REUTERS/Staff
![](http://archives.lincolndailynews.com/2024/Mar/13/images/ads/current/peasley_lda_051513.png)
China's property stocks took another knock amid the ongoing problems
there, while Tokyo's Nikkei also finished in the red as investors
took profits on some of its near 20% surge since early December.
[.T]
U.S. stock index futures were also subdued as investors awaited a
slew of economic data this week, including producer prices on
Thursday and retail sales numbers, for more clues on the Fed's
rate-cut path.
The benchmark S&P 500 climbed to a fresh record high on Tuesday as
Oracle shares surged and slightly hot consumer price data failed to
dampen investors' hopes for interest rate cuts in the coming months.
Traders now see a 66% chance of the first rate cut coming in June,
the CME FedWatch Tool showed. Since March 2022, the Fed has raised
its policy rate by 525 basis points to the current 5.25% to 5.50%
range.
"While the February CPI data was noisy across segments, we believe
the U.S. economy continues to be in good shape and is heading for a
soft landing," said Mark Haefele, chief investment officer at UBS
Global Wealth Management, in a note.
Dow e-minis and S&P 500 e-minis barely budged in Europe, while
Nasdaq 100 e-minis were fractionally lower.
The yen, which has been lifted from lows by growing expectations of
a rate rise in Japan, was about 0.2% firmer at 147.33 per dollar
after news of more wage hikes at large Japanese companies.
"We think the rate lift-off could happen in the March meeting,
following the annual wage negotiation outcome to be announced this
Friday," said MUFG analyst Lloyd Chan.
In commodities, higher yields yanked gold from near record levels
and it was last at $2,157 an ounce. Crude futures have been
rangebound for several weeks. Brent was last 0.5% stronger at $82.36
a barrel. [GOL/][O/R]
(Additional reporting by Tom Westbrook in Sydney; Editing by Mark
Potter)
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