Sell real estate....buy stocks? Global stocks at record high, bonds struggle
Reuters
Global stocks at record high, bonds struggle
Thursday December 28, 6:08 am ET
By Lincoln Feast
LONDON (Reuters) - Investors continued to prefer stocks over bonds on Thursday, pushing indexes around the globe to fresh record highs, while oil steadied after falling $3 a barrel over the past four sessions.
Euro zone government bonds drifted lower, extending their December sell-off as investors awaited U.S. data and absorbed Italian supply, while major currencies traded in tight ranges as volumes dried up between the Christmas and New Year holidays.
MSCI's All-Country World Index (^MSCIWD - News) nudged to a new all-time high of 368.6 points, taking gains for 2006 to 19 percent.
In Europe, the FTSEurofirst 300 Index (^FTEU3 - News) was little changed at 1,487.1 points at 1022 GMT, having come within two points of a 5-1/2 year high in early trade.
Germany's DAX (XETRA:^GDAXI - News) hit 6,625.55 points, its highest since February 2001 on hopes that 2007 will be a strong year for Europe's biggest economy, but activity was muted on the last full day of trading for 2006.
"Volumes will be very thin over the next few days and there's nothing really happening," said Duesseldorf-based WestLB analyst Thorsten Gindera.
The DAX is up more than 22 percent so far this year, outperforming gains of 17 percent for the FTSEurofirst 300 and 14 percent for the U.S. Standard & Poor's 500 (^SPX - News).
Asian stocks continued a strong year-end run, with MSCI's Asia ex-Japan index (^MSCIAPJ - News) up 0.7 percent at an all-time high.
Hong Kong's Hang Seng (HKSE:^HSI - News) closed above 20,000 points for the first time, while Australia's S&P/ASX 200 (Australia:^AXJO - News) hit a record peak of 5,673.7 points.
On Wednesday, U.S. stocks rose strongly, buoyed by ongoing takeover speculation and activity and gains for house builders after strong U.S. home sales. The Dow Jones industrial average (^DJI - News) notched up another record close of 12,510.57 points.
BONDS WILT AS STOCKS BLOOM
Equity gains kept pressure on euro zone government bonds, which fell on Wednesday after the housing data suggested the Federal Reserve might not cut interest rates sharply next year.
The March Bund future (FGBLH7) was 10 ticks lower at 116.238, while 10-year yields (EU10YT=RR) were at 3.928 percent.
The last scheduled auction of the year -- 7.5 billion euros of Italian paper -- met with less demand than the previous Italian sale and was at higher yields.
"There hasn't been any particularly good news for bonds and in this market it's hard to fight it," said one trader, adding that markets were awaiting a steer on the U.S. economy.
U.S. data on Thursday include consumer confidence, existing home sale and the Chicago Purchasing Managers' Index.
Oil inventories data will also be eyed after warm weather in the U.S. northeast dampened demand for heating oil, pushing prices down to close to $60 a barrel on Wednesday.
Prices steadied on Thursday with weekly inventories expected to show a draw in crude supplies and build in other products.
Currency markets were also little moved ahead of the U.S. data, with the euro slightly firmer against both the dollar and the yen. The euro was at $1.3140 (EUR=) and 156.25 yen (EURJPY=). The dollar was flat against the yen at 118.90 (JPY=).
"What is still very prevalent in the market is whether the data is weak enough to trigger a Fed rate cut any time soon," Bank of America currency strategist Kamal Sharma said.
"The data is relatively robust at the moment ... but the key will be the FOMC statement on January 31. If the Fed does signal a more balanced outlook then that could be the catalyst for the dollar to come under further pressure," he said.
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