- European stocks open up sharply
- New York's strong close last week fed into optimism across Asia overnight with Japan in the lead
- Oil, commodities are helping to drive indices higher
European stocks shot out of the blocks this morning as a confluence of supporting factors helped boost investor sentiment. Indices across the board were flashing green, following the lead of the US, where the S&P put on 0.5 per cent on Friday to set a new record high.
Meanwhile, even Japanese equities have joined the party with the Nikkei225 pushing on in overnight trade to finally surpass its 1990 high water mark after three decades of trying. Japan’s economy is bouncing back sharply, posting 3 per cent growth in GDP in the final quarter of the year.
It seems that across the globe, investors are tuning in to the reflation trade as vaccine targets are hit. The UK is leading the way in this respect with the government successfully meeting its first phase target over the weekend. This has opened up fresh, if predictable, debate within the Conservative party about the speed of opening up the economy but at least the debate is about a safe reopening of the economy which is positive.
This is reflected in the companies lighting up the leaderboard in early trading today with the likes of Tui, easyJet and National Express in demand as well as pubs groups. Commodity price inflation is also offering support to the likes of BP, up 2.25 per cent, Shell which is more than 3 per cent higher while the major miners BHP, Anglo American and Rio Tinto are all up by more than 3 per cent. But it is not all about blue chips - small caps in the UK have been on a tear since the turn of the year - find out more from our smaller companies stock picking expert Simon Thompson in his column today.
In the US, vaccinations are picking up pace and infections falling, lending credence to hopes of a sharp economic rebound in the second half of the year there, indeed Goldman Sachs last week upped its GDP growth forecast for the US for 2021 to 6.3 per cent.
While there is much to be positive about right now, there remains the risk of over optimism bidding markets up too much, leaving them at risk should there be any setbacks on the road to recovery. Then, there is also the risk that the inflation genie escapes the bottle – asset prices are already rising with the oil price up again to $63 a barrel by the end of last week and commodity prices also continuing to rise which will find its way into consumer price inflation data in coming months.
Meanwhile flavour of the month bitcoin hit a new high north of $49,000 over the weekend as it continues to bask in the glow of growing corporate acceptance of cryptocurrencies.
