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World Stocks Scale New Record Highs

The Swiss benchmark rose to an all-time high.The Swiss benchmark rose to an all-time high.

World stocks scaled fresh record highs on Friday, while the dollar stuck near four-month lows before crucial payroll numbers that could underpin growing confidence in the world’s biggest economy.

Global equity markets have begun 2018 with their best week in more than a year, continuing last year’s rally that has seen volatility plunge and investors’ appetite for risk surge, Reuters reported.

Data on Friday showing eurozone inflation slowing in December will also help bulls stay convinced central banks are not going to tighten monetary policy faster than expected.

MSCI’s gauge of stocks across the globe was up 0.19%, above 524 points and at a record high.

The Swiss benchmark rose to an all-time high, and the British index moved to another record, supported by optimism over regional economic strength and gains in US stocks overnight.

The pan-European STOXX 600 index was up 0.4%, holding at a two-month high. The first trading week of 2018 looks set to be the best for eurozone stocks since May, as shares shrug off a stronger single currency.   

US stocks were set to extend their new year rally Friday, a day after the Dow Jones Industrial Average closed above 25,000 for the first time and as several indexes around the world notched multiyear highs.

Stocks have continued last year’s gains, pushed higher by investor optimism over the global economy and a belief that central banks won’t hurt market and growth prospects by withdrawing stimulus too quickly.

“There is little impediment for continued gains whilst economic conditions that we’ve seen over the last few months continue, and there’s every reason to expect that to continue to be the case,” Ken Odeluga, market analyst at City Index, said.

Emerging market stocks have had their best start to the year since 2006 and added to those gains on Friday.

The US dollar failed to draw much strength from better-than-expected private payrolls data on Thursday and manufacturing numbers earlier this week, leaving the greenback around a four-month low against the euro.

Still, with two US interest rate hikes already baked into market expectations, traders believe there is more upside room for the euro as the ECB may move to rein in its monetary largesse faster than the market anticipates.

Investors will also be looking closely at the monthly employment report in the US, along with average hourly earnings data, due later today. The data could give some clues to the likely path for when central banks will tighten.

 “Currency markets broadly know what the Fed is going to do this year but the ECB monetary policy may be the surprise package of 2018,” said Richard Falkenhall, senior FX strategist at SEB in Stockholm.

The dollar has weakened as US long-term bond yields have remained low, despite the Federal Reserve increasing interest rates three times last year.

The 10-year US Treasuries yield stood just above 2.46%, below its seven-month peak of 2.504%

Gold prices dipped from the previous session’s 3-1/2 month high but remained on track for their fourth straight weekly gain.

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