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GLOBAL MARKETS-Global growth hopes keep shares near record high

Stock MarketsApr 07, 2021 11:18
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* MSCI ex-Japan reverses early gains, falls from 3-wk top
* Chinese, HK shares lower, CSI300 index off 1%
* Dollar softens to two-week lows
* Crude oil prices rise on economic recovery hopes
* Graphic: Global asset performance
* Graphic: World FX rates

By Marc Jones
LONDON, April 7 (Reuters) - World stocks took a well-earned
rest near record highs on Wednesday, as an International
Monetary Fund forecast of the strongest global growth since the
1970's this year and steady bond and FX markets kept risk
appetite buoyant.
While rising global COVID case numbers and geopolitical
tensions between China and Taiwan and between Russia and Ukraine
ensured it was by no means a fairytale, markets certainly had a
Goldilocks feel again.
Europe's STOXX 600 .STOXX perched just below the first
record high it had hit in over a year on Tuesday .EU . MSCI's
50-country world index .MIWD00000PUS was grinding out a sixth
day of gains and Wall Street futures were pointing higher too.
ESc1 .N
In the bond markets, there was little sign that the
benchmark government yields that drive global borrowing costs
were gearing up to shoot higher again. The dollar was sitting
quietly at a two-week low. /FRX GVD/EUR
The IMF raised its global growth forecast to 6% this year
from 5.5% on Tuesday, reflecting a rapidly brightening outlook
for the U.S. economy. If realized, that would be the fastest the world economy has
grown since 1976, albeit after the steepest annual downturn of
the post-war era last year when the COVID pandemic brought
commerce to a near stand-still at times.
"Even with high uncertainty about the path of this pandemic,
a way out of this health economic crisis is increasingly
visible," IMF Chief Economist Gita Gopinath said.
Overnight, MSCI's broadest index of Asia-Pacific shares
.MIAP00000PUS had started on a firm footing, going as high as
208.46 points, a level last seen on March 18.
However, it succumbed to selling pressure and ended flat as
China's blue-chip CSI300 index .CSI300 dipped 1% and Hong Kong
.HSI eased 0.9%.
Geopolitical tensions in the region added to the jitters.
Taiwan's foreign minister said on Wednesday it will fight to the
end if China attacks, adding that the United States saw a danger
that this could happen amid mounting Chinese military pressure,
including aircraft carrier drills, near the island. Other Asian markets managed to stay positive. Japan's Nikkei
.N225 closed higher; Australian shares .AXJO rose 0.6% and
South Korea's KOSPI .KS11 added 0.3%.

Wall Street futures pointed to a 0.1% rises for the S&P 500,
Dow Jones Industrial and Nasdaq. The S&P 500 and the Dow had hit
record levels on Monday, driven by a stronger-than-expected jobs
report last Friday and data showing a dramatic rebound in U.S.
services industry figures. .N
The upcoming earnings season is expected to show S&P profit
growth of 24.2% from a year earlier, according to Refinitiv
data, and investors will be watching to see whether corporate
results further confirm recent positive economic data.
All eyes will also be on minutes of the U.S. Federal
Reserve's March policy meeting when they are published later.
Ten-year and five-year Treasury yields US10YT=RR
US5YT=RR , were down at 1.6455% and 0.874% respective in Europe
from as high as 1.776% on the 10-year on March 30.
The five-year Treasury yield especially is seen as a major
barometer of the faith investors have in the Fed's message that
it doesn't expect to raise U.S. interest rates until 2024.
Europe's bond yields also eased, with southern European debt
markets stabilising after a selloff the previous session as
traded braced for a 50-year bond from Italy.
The European Central Bank meanwhile will release monthly
data on its conventional asset purchases and a bi-monthly
breakdown of its PEPP pandemic emergency bond purchases which it
has vowed to increase to keep borrowing costs low.
The dollar =USD circled a two-week low of 92.246 against a
basket of world currencies. FRX/
The euro EUR= was flat at $1.1871, sterling was weaker at
$1.3795 GBP= . The Japanese yen JPY= was a touch lower at
In commodities, Brent crude futures LCOc1 were nudging
lower at $62.67 a barrel. U.S. crude CLc1 was up at $59.51 and
both gold XAU= and copper were off at $1,736.4 an ounce and
8,980 a tonne respectively. GOL/ MET/L
"A large share of the hopes of a U.S. growth boom supported
by state aid and rapid vaccination progress has already been
priced in," Commerzbank FX and EM analyst Esther Reichelt wrote
in a note to clients.
"Further and more pronounced USD gains would only be
justified if this boom also caused rising inflation rates to
which the Fed would have to react with higher interest rates."

Global assets
Global currencies vs. dollar
Emerging markets
MSCI All Country World Index Market Cap
How financial markets have performed over the last week

GLOBAL MARKETS-Global growth hopes keep shares near record high

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