London/Tokyo — Global stocks ground higher while oil ebbed on Thursday as markets haggled over whether to bet on economic recovery in the US and other developed markets or worry about a surge in Covid-19 cases in countries including India.
The push-pull of that trading dynamic comes as vaccination rates in Britain and other countries continue to improve and pandemic-weary citizens embrace more freedoms to drive economic growth, something reflected in some recent corporate earnings.
After a recent mini sell-off, MSCI’s broadest gauge of stocks across the globe was up 0.3% in early European trade to trade back within 1% of its all-time closing high.
Europe’s top indexes also all opened higher ahead of the latest meeting of the European Central Bank (ECB), with the broad Stoxx Europe 600 up 0.5%, bolstered by upbeat earnings from Nestle and Volvo.
“The European Central Bank isn’t expected to ruffle any feathers this Thursday, with analysts predicting that it will be another steady session from Christine Lagarde and Co,” said Connor Campbell, financial analyst at Spreadex.
“But with a while until the next meeting — the central bank skips May — the ECB could use this opportunity to sharpen its forward guidance. There are also hawks lurking among the doves, meaning the get-together may not go as smoothly as forecast.”
The buoyant start to the day followed overnight gains in Asia, where Japan’s Nikkei 225 rose 2.4% and MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.3%.
US stock futures pointed to a flat open on Wall Street.
Despite stocks being generally upbeat, oil — another asset geared to perceptions of economic growth — fell after a resurgence of Covid-19 cases in India and Japan, and a recent surprise stock build in the US, weighed on sentiment.
US crude was last down 0.4% at $61.08 a barrel while European benchmark Brent was down 0.4% at $65.06.
“An unexpected and high increase in US inventories fuelled concerns over weak demand which came against expectations for a strong recovery in demand,” said Satoru Yoshida, a commodity analyst with Rakuten Securities.
“What is hurting market sentiment is also the fact that the Covid-19 pandemic is spreading again at a fast pace in India and Japan despite the fact there had been hopes that the spread of vaccination would improve the infection situation,” he said.
Elsewhere, US treasury yields stayed depressed, with the yield on benchmark 10-year notes at 1.5486% on Thursday, a level last seen in early March.
In currency markets, the dollar remained pinned near multi-week lows, down 0.1% against a basket of major peers as US yields stayed subdued.
Against that backdrop, spot gold steadied near a two-month high and within touching distance of $1,800/oz. It last traded at $1,792.8/oz.
The ECB decides policy later on Thursday, with no change expected.
The US Federal Reserve and Bank of Japan follow next week.