Investors start 2010 in bullish mood
London, January 4, 2010
Financial markets kicked off 2010 on an upbeat note on Monday with world stocks driven close to 15-month highs by hopes of a sustainable economic recovery.
Wall Street looked set to open the year higher, but the dollar was weaker against a basket of major currencies and government bonds sold off.
MSCI's all-country world stock index was up more than half a per cent, slightly below 2009 highs but around where they were in October 2008 just after US investment bank Lehman Brothers collapsed to trigger financial turmoil.
Other indexes are beyond that mark, with MSCI's emerging market benchmark and its Asian Pacific stocks ex-Japan gauge both at 17-month highs.
Investors were essentially adding to last year's bets that the global economy will improve and that riskier assets such as stocks were oversold when fears of a banking meltdown swept the market.
MSCI' main index gained 31.52 per cent last year, the Asian one 68.32 per cent and the emerging market benchmark 74.5 per cent.
'There is a generally a feeling of modest optimism at the start of the year,' said Andrew Milligan, head of global strategy at Standard Life Investment.
'We are looking forward generally to a year of positive growth in most countries and good profits growth for most companies.' He added, however, that investors would need to be selective.
European and Japanese shares were up strongly on the first trading session of the year.
The FTSEurofirst 300 index of leading European shares was up three quarters of a per cent after gaining 25.7 per cent last year while the Nikkei closed up 1 per cent, adding to 2009 gains of 19.04 per cent.
The dollar fell back from early gains, coming off an earlier four-month high against the yen, with the euro getting some support from the euro zone manufacturing data.
Currency investors were focused on US data this week, starting with Monday's ISM manufacturing survey and culminating in Friday's key US monthly jobs data, which could give further reason to believe the US is on the road to recovery.
'Any strength will help support the dollar,' BNP Paribas currency strategist Ian Stannard said.
The dollar was down 0.4 per cent against major competitors and flat against the yen. The euro gained half a per cent to $1.4399.
Euro zone government bonds were weak. The 10-year yield was flat to lower at 3.394 per cent and the two-year was at 1.381 per cent, up 3 basis points.-Reuters