World stocks hit record high as techs lead relief rally

A screen displays the Dow Jones Industrials Average after the close on the floor in US on Jan 9, 2020. PHOTO: REUTERS

TOKYO (REUTERS) - The world's shares hit a record high on Friday (Jan 10) as a relief over de-escalation of US-Iranian tensions quickly prompted investors to bet on faster global growth, especially in the technology sector.

MSCI's broadest gauge of the world's stocks in 49 countries rose a tad to hit an all-time high and its index of Asia-Pacific shares outside Japan rose 0.18 per cent.

Japan's Nikkei rose 0.34 per cent while Australian stocks rallied 0.7 per cent to a record high. Chinese shares were little changed.

Singapore's Straits Times Index was up 0.13 per cent to 3,251.69 as of 10:24am.

Asia's gains followed record-setting in the pan-regional STOXX 600 index in Europe and the three major stock indexes on Wall Street.

The S&P 500 gained 0.67 per cent, with its technology sector rising more than 1 per cent. Apple gained 2.1 per cent, helped by news that sales of its iPhones in China in December jumped more than 18 per cent year on year.

Investors welcomed the report as a prelude to the upcoming visit by China's Vice Premier Liu He, head of the country's negotiation team in US-China trade talks, to Washington next week to sign a trade deal with the United States.

"We will have a symbolic event of Sino-US dialogue. Given the current strength of the market, it is hard not to expect this rally to continue for the time being," said Norihiro Fujito, chief investment strategist at Mitsubishi UFJ Morgan Stanley Securities in Tokyo.

Global shares quickly erased losses that followed missile attacks from Iran targeting US forces in Iraq, as the two countries moved to defuse the tension.

"On top of easing tensions in Iran, optimism on US corporate earnings are fuelling sentiment. The euphoria is coming back to the markets," said Masanari Takada, cross asset strategist at Nomura Securities.

While analysts expect slight declines in profits for S&P 500 companies in the last quarter, they see a solid recovery this year.

Waning worries about all-out war in the Middle East pushed down gold, safe-harbour currencies and oil.

Gold eased 0.3 per cent to US$1,547.8 per ounce from a seven-year high of US$1,610.90 hit right after Iran's missile attack on Wednesday.

Against the yen, the US dollar traded at 109.52 yen , having hit a two-week high of 109.58 in US trade on Thursday.

The euro stood little changed at US$1.1105, having fallen to US$1.10915 in the US trade, its lowest in about two weeks.

The pound fell to a near two-week low against the US dollar after Bank of England Governor Mark Carney said there could be a "relatively prompt response" from the bank if the current spell of economic weakness persisted.

It last stood at US$1.3069, having fallen to as low as US$1.3014 in the previous session.

Oil prices were sharply lower from their highs hit in the wake of Iran's missile attack.

US West Texas Intermediate (WTI) crude fell to as low as US$58.66 per barrel on Thursday and last stood at US$59.38, down 0.3 per cent on the day, compared to Wednesday's peak of US$65.65.

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