Stocks cheer prospects for low rates, oil jumps on pipeline outage

MILAN: World stocks ticked up to new peaks on Monday on bets interest rates will remain low and the economy continue its recovery, while oil prices jumped after a cyber attack on a U.S. pipeline operator unnerved markets.

MSCI's gauge of stocks across the globe hit a fresh record high and was up 0.1per cent by 0740 GMT, driven by gains across Asian markets overnight and a steady open in Europe.

Europe's STOXX 600 regional benchmark was up 0.1per cent in early deals, while MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.4per cent. S&P 500 futures were flat while Nasdaq futures fell 0.5per cent.

U.S. nonfarm payrolls data on Friday showed jobs growth slowed much more than expected in April in a shock release that gave equities a lift but put downward pressure on the dollar and U.S. Treasury yields.

"A statistical fluke and/or a temporary pause in labor market demand is the likeliest culprit for this report. However, the Federal Reserve cannot afford to adjust policy without concrete proof of a stronger labor market recovery," said Natixis economist Troy Ludtka.

On Friday the Dow Jones Industrial Average and the S&P 500 rose to record closing highs as the disappointing data on the U.S. jobs market eased concerns about a spike in consumer prices.

In recent weeks, some investors had been placing bets that a robust U.S. economic recovery from the coronavirus pandemic would force the Federal Reserve to tighten policy earlier than the central bank has outlined.

However, the weak nonfarm payrolls report caused a rapid reversal in some of these trades, which rippled through stocks, bonds, and major currencies.

U.S. President Joe Biden said after the report that the figures showed the economy was not at risk of overheating and underscored how vital his administration's economic actions are.

"In the end, it is the best of all possible worlds for equities: robust economy, strong earnings, but no monetary policy tightening and more fiscal spending coming," said Giuseppe Sersale, fund manager at Anthilia in Milan.

The focus now shifts to U.S. consumer price data due on Wednesday, which will help investors determine whether they need to scale back their inflation expectations even further.

The dollar index against a basket of six major currencies edged up 0.17per cent to 90.301 but was just above its lowest since Feb. 25 hit earlier in the session.

The British pound jumped to the highest in more than two months against the greenback, but traders said worries about Scottish independence could curb sterling's gains. It was last up 0.5per cent at US$1.406.

In the cryptocurrency market, ether rose 5per cent to a fresh record above US$4,000. Bigger rival bitcoin rose 1per cent to US$58,862.

The yield on benchmark 10-year Treasury notes added around 1 basis point to 1.597per cent after having plunged to a two-month low of 1.469per cent on Friday.

Oil prices rose after a cyber attack shut down a U.S. pipeline operator that provides nearly half of the U.S. east coast's fuel supply.

Brent crude rose 0.5per cent to US$68.64 per barrel as the disruption to U.S. supplies rattled energy markets, while U.S. crude ticked up 0.5per cent to US$65.23 a barrel.

The White House was working closely with top U.S. fuel pipeline operator Colonial Pipeline on Sunday to help it recover from a ransomware attack that forced the company to shut its main fuel lines.

Copper prices touched record highs on hopes for improved demand amid tightening supply. Three-month copper on the London Metal Exchange rose to US$10,747.50 a tonne earlier in the session before easing back slightly.

(Reporting by Danilo Masoni in Milan and Stanley White in Tokyo; editing by Emelia Sithole-Matarise)