Global Stocks Extend Eight-Day Rally; Oil Climbs: Markets Wrap

(Bloomberg) -- Global stocks pushed forward on an eight-day winning streak on the heels of positive corporate news, improving virus trends and U.S. stimulus plans.

The MSCI World Index gained 0.2%, the longest advance since November. French investment bank Natixis SA surged 8% after financial group BPCE SA offered to buy out minority shareholders. Tencent Holdings Ltd. drove strong gains in Asia as the company won Chinese regulatory approval to roll out a blockbuster game.

Outside of equities, the moves were more muted. Oil prices ticked higher. The dollar was steady ahead of a report on U.S. consumer prices due later on Wednesday. While the reading is expected to be tepid, inflation has quickly become the biggest issue in markets on speculation the Federal Reserve will let the U.S. economy run hot out of the pandemic.

“This buy-everything stock rally is defying reality, but the fear of missing out keeps pushing prices higher,” said Peter Rosenstreich, head of market strategy at Swissquote. “The real worry I have is the lack of real issues that would halt the optimism.”

Across markets, the theme continues to be the reflation trade -- the bet that Covid-19 vaccines will restore economic growth and fuel gains in everything from stocks to crude oil. Daniel Tenengauzer, head of markets strategy at Bank of New York Mellon Corp., has warned that if inflation gets hotter than the Fed’s is aiming for, it may force the central bank to adopt a tool to cap long-term yields, known as yield-curve control.

Yields on the 30-year Treasury are holding just below 2% after crossing that threshold earlier this week.

Surging Inflation May Force Fed to Resort to Yield Curve-Control

Elsewhere in markets, platinum rallied to a six-year high on expectations it will benefit from tight supplies and investment demand. Bitcoin fluctuated around $46,000.

Here are some key events coming up:

• EIA crude oil inventory report comes Wednesday.
• Sweden will set monetary policy on Wednesday.
• Federal Reserve Chair Jerome Powell will speak on a webinar Wednesday.
• The U.S. consumer price index comes Wednesday.
• Lunar New Year public holidays begin in nations across Asia, with China breaking for a week.
• Bank of Russia’s policy decision comes Friday.

These are the main moves in markets:

Stocks

• Futures on the S&P 500 Index increased 0.2% as of 9:46 a.m. London time.
• The Stoxx Europe 600 Index gained 0.3%.
• The MSCI Asia Pacific Index rose 0.7%.
• The MSCI Emerging Market Index rose 0.9%.

Currencies

• The Bloomberg Dollar Spot Index was little changed at 1,124.38.
• The euro was little changed at $1.2123.
• The British pound climbed 0.2% to $1.3846.
• The Japanese yen weakened 0.1% to 104.67 per dollar.

Bonds

• The yield on 10-year Treasuries gained less than one basis point to 1.16%.
• The yield on two-year Treasuries was unchanged at 0.12%.
• Germany’s 10-year yield rose less than one basis point to -0.44%.
• Britain’s 10-year yield climbed two basis points to 0.48%.

Commodities

• West Texas Intermediate crude gained 0.4%.
• Gold strengthened 0.2% to $1,842.08 an ounce.

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