European stocks are set to rise for the third consecutive session Friday amid a global market rally that has taken world stocks to their highest levels on record amid signs that the U.S. Federal Reserve will only alter its policy stance gradually.
Britain’s FTSE 100 will add around 10 points, or 0.13%, at the opening bell, according to financial bookmakers IG, with slightly firmer gains anticipated for markets in Germany and France.
Fed Chariwoman Janet Yellen reiterated yesterday, in her second series of statements to lawmakers in Washington, that she and her colleagues will remain cautious when taking decisions to raise interest rates or unwind the central bank’s $4.5 trillion balance sheet in order not to disrupt financial markets or snuff out the economy’s growth prospects.
With the U.S. corporate earnings season about to begin — JPMorgan, Citigroup and Wells Fargo will publish second quarter figures later today — investors around the world have taken the Fed’s signalling, as well as the underlying strength of the global economy, as a reason to add risky positions in financial markets.
The MSCI All-Country index, the broadest measure of global share prices, hit an all-time high in overnight trading while regional stocks in Asia advanced for the fifth consecutive day, lifting the MSCI Asia ex-Japan benchmark 0.25% to a two-year high.
The U.S. dollar index, which measures the greenback’s strength against a basket of six global currencies, stabilized at 95.74 after slipping to a nine-month low earlier in the week as the prospects of higher domestic interest rates faded.
Early indications from U.S. equity futures suggest Wall Street will add to gains at the opening bell, although much will depend on the strength of earning from the financial sector, as well as data on industrial production, retail sales and core inflation prior to the start of trading.
Retail shares, in fact, led the Dow Jones Industrial Average to its second consecutive record Thursday, with the benchmark adding 0.10% to end the day at 21,553 points. Futures suggest traders will add around 10 points to that tally at the start of trading, with similar advances priced in for the S&P 500 and the Nasdaq.