Thursday 23:00 BST
What you need to know
● FTSE All-World and S&P 500 indices hit records
● June starts with big data dump
● FTSE 100 flirts with new highs
● Sterling dips as traders eye polls
● Oil prices steady but iron ore hits 7-month low
World stocks set fresh record highs as the first day of June saw a welter of heavyweight economic data that could help determine global investor sentiment during the summer months.
The FTSE All-World equity index — powered of late by Wall Street and the City entering virgin territory — moved up 0.6 per cent to 308.33, beating its previous best-ever close of 307.29 hit on May 25.
Optimism on corporate earnings amid signs of improvement in the global economy — notably a pick-up in the eurozone — have been supporting many national equity benchmarks.
Historically low government bond yields, suppressed by continued ultra-accommodative monetary policies of most of the world’s significant central banks, are also making stocks appear more attractive.
Now, the start of the month provides traders with ample opportunity to see if that scenario holds; a “Goldilocks” market environment of adequate economic growth but supportive central banks.
Thursday brought a batch of national manufacturing surveys, followed at the start of next week by similarly assessed service sector reports.
In between, the US private payroll number increased ahead of expectations, setting the scene for what is expected to be a nudge higher in US interest rates this month.
The UK’s FTSE 100 rose 0.3 per cent to 7,543, just short of its best-ever close as steadier oil prices support the energy sector.
In New York, the S&P 500 gained 0.8 per cent to 2,430 in late afternoon, leaving the Wall Street benchmark ahead of last Friday’s record close of 2,415.8.
The pan-European Stoxx 600 added 0.4 per cent as weakness in miners and telecoms cap gains.
Japanese stocks were boosted by data showing capital spending growing by 4.5 per cent during the first three months of the year, a faster pace than economists expected, while company profits jumped 26.6 per cent. In addition, the country’s manufacturing growth hit a three-month high, all helping to push the broad Topix benchmark up 1.1 per cent.
China’s Shanghai Composite fell 0.5 per cent after a privately prepared but closely watched survey showed the country’s manufacturing sector contracted in May for the first time in a year. However, the renminbi hit a six-month high as Beijing intervened to bolster the currency.
Australia’s S&P/ASX 200 gained 0.2 per cent following news that retail sales grew in April at their quickest pace since September 2014. Capital expenditure during the March quarter rebounded from the end of last year but not by as much as economists forecast.
The materials sector was a poor performer in Sydney, as the price of iron ore floundered and traders inherited Wednesday’s 3 per cent drop in the price of oil, which came amid fears US producers would counteract Opec output cuts.
Brent crude reversed earlier gains to settle down 0.1 per cent on Thursday to $50.25 a barrel.
Iron ore futures in China fell, facing their sixth straight session of declines as traders fretted that slowing construction activity in the world’s second-biggest economy would exacerbate an ore glut. Prices moved to their cheapest in seven months, having lost about 14 per cent in May and more than 37 per cent from a 2017 high in February.
Gold traded down 0.2 per cent at $1,266 an ounce.
Forex and fixed income
The British pound was marginally weaker at $1.2882 as traders continue to look towards next week’s UK election. Sterling was volatile on Wednesday, falling to a five-week low of $1.2767, then rallying to a session high of $1.2919 following a poll showing an increased chance of a hung parliament.
Traders are buying protection against further sterling weakness. The 1-month sterling/dollar risk reversal, which shows how much investors are favouring put options over calls, fell to 1.3, its most bearish since October.
However, UK 10-year gilts moved up three basis points to 1.07 per cent after a survey showed the country’s manufacturing sector remains in robust health.
The dollar index, a measure of the US currency against a basket of global peers, dipped 0.3 per cent to 97.201, and 10-year Treasury yields are added 1bp to 2.21 per cent after the ADP survey of private sector employment showed the US adding 253,000 jobs in May and the ISM manufacturing survey also signalled strength.
The euro fell 0.3 per cent to $1.1213 and German 10-year Bund yields traded flat to 0.30 per cent despite news that the bloc’s manufacturing base saw record jobs growth in May.
The strong batch of economic data failed to prop up the yen, which lost 0.5 per cent to ¥111.37, and the same fate hit the Australian dollar, off 0.7 per cent to US$0.7374 as the weak iron ore price, a key Aussie export, weighed on sentiment.
Additional reporting by Peter Wells in Hong Kong and Nicole Bullock and Joe Rennison in New York
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