World stocks advance to one-month high

London — World stocks climbed to a one-month high on Tuesday as a rally in technology shares and prospects of solid corporate earnings helped counter concerns about elevated inflationary pressures.

Oil prices took a breather from their eye-catching rise in recent weeks while the worrying trend of flattening global government bond yield curves paused, helping investors recoup some of their appetite for risky assets.

The MSCI gauge of world stocks climbed to its highest levels since September 17 while US stock futures gained in early London trading. European stocks advanced 0.3%.

“It seems that better-than-expected earnings results from big US banks last week encouraged some market participants to start this week by increasing their risk exposure, as they may have become somewhat more optimistic for the rest of the season,” said Charalambos Pissouros, head of research at JFD group.

Macro-economic data also offered some relief for global markets with weaker-than-expected growth data on China and US industrial production numbers on Monday fuelling hopes that central banks won’t rush to tighten monetary policy.

Bond markets welcomed the data where yields on 10-year U.S. Treasury notes fell almost 6 basis points from Monday’s high while the US dollar weakened broadly against its rivals to a three-week low.

Traders said a rally in non-dollar currencies was also due to some short-position covering by hedge funds and the dollar’s weakness on Tuesday also helped relieve some concerns about dollar funding shortages in the cross-currency swap markets.

But beneath the surface, concerns lurked. A Bank of America monthly fund manager survey noted that cash levels among investors rose to a 12-month high, signalling growing caution.

Analysts said the Wall Street rally overnight, in which Apple, Facebook and Microsoft all rose, was behind a strong performance in stock markets.

Sterling, the Australian dollar and the New Zealand dollar all hit month highs against the greenback in the Asian session, while the euro hit a two-week high against a broadly struggling dollar.

Brent crude rose 0.28% to $84.56 a barrel, though the pace of gains in oil prices slowed. US crude gained 0.44% to $82.8 a barrel. Brent crude prices are up by one-third in two months.

Gold also gained on lower yields, with the spot price rising 0.6% to $1,775.2 an ounce, but remaining within its recent range.

Reuters