World markets reach record levels as yen slips
European shares were higher, pushing the MSCI all-world index closer to its all-time record hit on Tuesday. US stock futures were pointing to a firmer start on Wall Street.
The yen slipped against the dollar and euro as investors grew more confident Group of Seven financial chiefs would take no concerted action against the Japanese currency’s weakness at this week’s meeting. European bonds were flat.
Investors have poured money into European stocks as the global economy has remained robust and liquidity plentiful despite central banks’ effort to raise interest rates.
“There is nothing new to change my mind that we are still positive on the market, that we think we will have a positive return in 2007,” said Philipp Musil, equity fund manager at Constantia Privatbank in Vienna.
This has lifted the likes of the FTSEurofirst up more than 4% in just over a month. The index was slightly higher yesterday at 1,543.85.
Britain’s FTSE 100 was little changed, while France’s CAC 40 was up 0.2% and Germany’s DAX up 0.3%.
Earlier, Japanese shares fell but the Australian market rose to fresh record highs. Japan’s Nikkei ended down nearly 0.7% at its lowest close in three weeks as shares in technology firms and other exporters were hit by the yen’s rebound earlier this week.
US business productivity rose at a stronger-than-expected 3.0% annual pace in the fourth quarter, while unit labour costs rose less than predicted.
The yen’s slide of some 16% in the past three years to successive record lows against the euro has captured market attention, with European officials determined to take up the issue at the G7 meeting in Essen, Germany, on February 9-10.
“We think that an explicit statement on the yen is unlikely to appear in the communique, as it seems only the euro area is having an issue with yen weakness,” JP Morgan said in a note to clients.
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