Global shares held firm near record highs on Monday while U.S. bond yields flirted with three-month lows as investors expect the Federal Reserve to stick to its dovish mantra later this week.
Japan’s Nikkei (.N225) rose 0.35% while MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) was down 0.1%. Activity was limited with the region’s largest markets – China, Hong Kong and Australia – closed for a holiday.
Globally, equity markets were basking in the prospects of a broadening economic recovery from the coronavirus pandemic and anticipation of continuity in dovish monetary policy from the U.S. Federal Reserve.
The MSCI all-country world equity index (.MIWD00000PUS), the U.S. S&P 500 (.SPX) and the pan-regional STOXX Europe 600 index (.STOXX) all closed at record highs on Friday.
The rally came even as U.S. inflation data on Thursday exceeded market expectations.
“One big factor is that the Fed has been saying inflation will be transitory and that it will maintain loose monetary policy,” said Norihiro Fujito, chief investment strategist at Mitsubishi UFJ Morgan Stanley Securities. “But another factor to consider is that markets are simply awash with cash.”