GLOBAL MARKETS-European shares hit highs as markets upbeat about recovery prospects

* Reuters Live Markets blog: LIVE/

By Elizabeth Howcroft
LONDON, April 19 (Reuters) - World shares traded near record
highs on Monday, as markets were generally upbeat about the
prospects for a global economic recovery from COVID-19, ahead of
a busy week for earnings.
Europe's STOXX 600 reached a record high and was up 0.2% at
0736 GMT .STOXX . Asian shares hit one-month highs overnight.
MSCI world equity index .MIWD00000PUS , which tracks shares
in 49 countries, was flat on the day, having come close to but
not surpassed Friday's record high. MSCI's main European Index
was up 0.1% .MSER .
Matthias Scheiber, global head of portfolio management at
Wells Fargo Asset Management cited low interest rates, the
rollout of COVID-19 vaccines and the fiscal stimulus package in
the United States as reasons for his bullish stance on equities.
"Risk is coming down, volatility is coming down … we see the
slow reopening of global economies, the rollout of the vaccine
and the huge catch-up in demand so from that perspective it
should be positive for economic growth."
"We had a strong rally in cyclical and value stocks since
the start of this year - we would like to see confirmation in
the earnings."
Earnings from IBM IBM.N and Coca-Cola COKE.O are due
later in the session. Netflix NFLX.O reports on Tuesday. Later
in the week, American Airlines AAL.O and Southwest LUV.N
will be the first major post-COVID cyclicals to post results.
The European Central Bank meeting on Thursday will also be
in focus this week. ECB President Christine Lagarde said last
week that the euro zone economy is still standing on the "two
crutches" of monetary and fiscal stimulus and these cannot be
taken away until it makes a full recovery. Euro zone government bond yields were lower, with the
benchmark German 10-year yield down one basis point at -0.27%
DE10YT=RR .
The benchmark U.S. Treasury yield, which dropped as low as
1.528% last Thursday, was at 1.5606% US10YT=RR .
The U.S. economy is set to take off this year as more
Americans get COVID-19 vaccinations and become comfortable
engaging in a wider range of activities, but any accompanying
spike in inflation is likely to be temporary, the Federal
Reserve's newest board member said on Friday. In currency markets, the dollar index was down 0.4% at its
lowest levels in more than a month =USD , at 91.259, having
weakened since its recent peak of 93.439 at the end of March.
Dollar-yen was also down 0.5%, changing hands at 108.250
JPY=EBS .
The euro was up 0.3% versus the dollar at $1.20165
EUR=EBS .
"We have been highlighting over the past two months that USD
could bottom out, in contrast to consensus, and believed that
this would be a tactical problem for EM and for certain
commodity trades," wrote JP Morgan's head of global and European
equity strategy, Mislav Matejka, in a note to clients. "We think
the risk of a firmer USD, through rising US-Europe interest rate
differential, is not finished."
Matejka also said that, although there is the technical
potential for a correction in equities, he would not cut stocks
exposure on the six- to nine-month horizon.
"We think that it is more likely that we will be raising our
year-end targets, rather than reducing them, as we move through
the summer," he said.
Likewise, Wells Fargo Asset Management's Matthias Scheiber
said "We believe we are in the 'buy the dip' environment at this
moment given that both fiscal and monetary policy are very
supportive, so if we would see a correction … we would probably
increase the equity position.”
Bitcoin was up nearly 2% BTC=BTSP at around $57,400,
nursing losses from Sunday, when it plunged as much as 14% to
$51,541.
Oil prices fell as rising COVID-19 infections in India
prompted concern than stronger measures to contain the pandemic
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Emerging markets http://tmsnrt.rs/2ihRugV
Global asset performance http://tmsnrt.rs/2yaDPgn
ECB PEPP https://tmsnrt.rs/2Ni0Zyb
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