European stocks edged higher Friday
European stocks edged higher Friday, continuing the upward trajectory that followed Tuesday’s U.S. presidential election, as bond yields continued to climb.
The index was up 0.18% in morning trading.
Utilities and auto stocks led Europe’s equity market sectors, rising by around 2%. Bank stocks which rallied on Thursday were more muted on Friday.
In the U.S., futures pointed to a slight dip in the S&P 500, down 0.15%. Moves in futures do not always reflect changes after the opening bell.
The debt of advanced economies continued to be sold off at the market open. U.K. 10-year gilt yields reached 1.4% in early trading, their highest since before the Brexit vote in June. Germany’s 10-year bund yields climbed to 0.3% in early trading, their highest since March.
Analysts identified a common cause in the surge in stocks and the selloff in bonds since election day. Expectations for President-elect Donald Trump’s plans for tax cuts and infrastructure spending, potentially funded by higher deficits, have driven asset prices.
“The market has to take into account how positive the policies from Trump may be. Inflation and growth expectations may firm up much higher than they have been,” said Peter Chatwell, head of European rates strategy at Japanese bank Mizuho International.
“These are the sort of levels I was expecting gilts and bunds to reach by the end of 2017, That’s the reflation trade,” Mr. Chatwell added.
Stocks in Asia were mixed on Friday. Japan’s closed 0.2% higher, but emerging-market equities in Asia were sold off.
The Philippines closed down 2.88%, and Indonesia’s Jakarta Composite Index dropped 4.01%, and South Korea’s index ended the day down by 0.91%.
Copper prices continued to surge, rising by more than 6% to $5,995 per tonne. The metal is on its longest sinning streak for at least 27 years, and the price is now at its highest level in a year.
In currency markets, the rose against the dollar, up by 0.65% to $1.262. That’s the highest level since sterling’s flash crash in early October, when the currency plunged by more than 6% in a matter of minutes.
The Dow surged to a fresh record high Thursday, up 2.7% from its election day close on Tuesday, bucking widespread expectations for a selloff after Mr. Trump’s presidential victory.
Source: WSJ – European Stocks Inch Higher, Extending Trump Victory Rally
