World stocks were within touching distance of an all-time high on Wednesday as investors cheered signals from Federal Reserve Chair Janet Yellen that the US central bank would not rush into raising interest rates.
Markets, still on high after the euro zone agreed to extend Greece’s aid deal, were given a further lift as slightly better-than-expected Chinese factory activity data helped ease concerns about the extent of the country’s economic slowdown.
European bourses opened little changed, happy to take a breather after six days of unbroken gains and a surge since the start of the year that has seen the benchmark FTSEurofirst 300 race up roughly 17 percent, Reuters reported.
Following more rises for Wall Street and in Asia overnight, MSCI’s 46-member All Country World Index was up 0.2 percent at 433.74 points and straining for the 434.24 all-time peak it scored back in September.
Yellen had told Washington’s Senate Banking Committee that the US central bank was preparing to consider interest rate hikes “on a meeting-by-meeting basis”, but that she and her colleagues would provide markets with a clearer signals before they moved.
The dollar had dropped in the wake of Yellen’s comments overnight and continued to slip against a basket of currencies in early European trading. It fell 0.2 percent against the yen to 118.73 yen, while the euro was up 0.3 percent at $1.1375 Sterling too, was up by a similar margin at $1.5502.
Fragile China
In China, the world’s second largest economy, the closely watched flash HSBC/Markit Purchasing Managers’ Index (PMI) inched up to 50.1, above the 50-point level that separates growth in activity from a contraction on a monthly basis.
It beat consensus estimates for a reading of 49.5 even as China’s manufacturers still face considerable risks from weak foreign demand and deepening deflationary pressures.
MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS had ended up 0.85 percent, though Japan’s Nikkei snapped a five-day winning streak after hitting a 15-year high in the previous session.
A backdrop of weakening global growth has been keep investors on the edge about the Fed’s plans, with some worrying a premature start to the US rate hike cycle could dent momentum in the US economy even as Europe and China continue to struggle.
Because Yellen gave no sign of an imminent rate increase, investors piled back into US Treasuries, sending benchmark 10-year yields back below 2 percent and two-year yields to 2-1/2-week lows.
