Key world equity indexes scaled new highs on Friday as a surge in U.S. housing starts to levels last seen in 2006 powered stocks while the greenback rose to a one-week high against the euro on expectations of solid economic growth.
Optimism over corporate earnings and indications of resilience in China’s economy also lifted equities and pushed government debt yields higher.
U.S. housing starts jumped 16.9 per cent to a seasonally adjusted annual rate of 1.608 million units in December, a 13-year high.
MSCI’s gauge of stocks across the globe gained 0.21 per cent, its fifth straight day of new highs.
Canada’s main stock index hit another all-time high on Friday, tracking gains in global equities.
The Toronto Stock Exchange’s S&P/TSX Composite index was unofficially up 74.25 points, or 0.42 per cent, at 17,559.02, finishing with its second straight weekly gain.
A revival in the Canadian economy may already be underway, according to a Reuters poll of economists, who were mostly confident a rate cut was not needed and so predicted monetary policy would remain unchanged this year.
The materials sector, which includes precious and base metals miners, ticked up 0.2 per cent as gold prices rose and copper prices remained near eight-month highs.
Energy stocks slid 0.9 per cent.
Leading the index were Ballard Power Systems Inc., up 9.3 per cent, Interfor Corp., up 8.4 per cent, and Norbord Inc., higher by 7.7 per cent.
Lagging shares were Hexo Corp., down 9.1 per cent, Bombardier Inc., down 8.2 per cent, and Ag Growth International Inc., lower by 4.6 per cent.
The resurgent U.S. economy, backed by an accommodative Federal Reserve, is bringing investors off the sidelines back into the market, said Brent Schutte, chief investment strategist at Northwestern Mutual Wealth Management Co in Milwaukee.
An improving economy also is reducing the fear of being the last person to invest before a recession, Schutte said.
“Those people are now coming back into the market because recession fears are diminishing,” he said. “When you look out there and you have a 10-year Treasury at 1.8 per cent and you have the economy turning around, where are you going to put your money?”
European shares touched a record high, as the broad pan-European STOXX 600 index rose 0.92 per cent.
The three main indexes on Wall Street also hit records.
The Dow Jones Industrial Average rose 49.44 points, or 0.17 per cent, to 29,347.08, the S&P 500 gained 12.6 points, or 0.38 per cent, to 3,329.41 and the Nasdaq Composite added 31.81 points, or 0.34 per cent, to 9,388.94.
Emerging market stocks rose 0.37 per cent.
China stocks rose as investors cheered further signs of resilience in the Chinese economy and the signing of the Sino-U.S. trade deal.
China’s economy grew 6 per cent in the fourth quarter, data that reinforced signs of improving business confidence, though anemic domestic demand and the trade war slowed the growth rate to 6.1 per cent in 2019, the slowest in 29 years.
Both the blue-chip CSI300 index and the Shanghai Composite Index gained 0.1 per cent.
The safe-haven Japanese yen weakened as the record-setting rally in stocks showed strong risk appetite.
The dollar index rose 0.31 per cent, with the euro down 0.4 per cent to $1.109. The yen weakened 0.01 per cent versus the greenback at 110.18 per dollar.
Oil prices edged higher on concerns that slower growth in China could dent fuel demand.
Brent crude futures rose 23 cents to settle at $64.85 a barrel. U.S. West Texas Intermediate (WTI) crude futures rose 2 cents to settle at $58.54 a barrel.
For the week, Brent fell 0.2 per cent, while WTI lost 0.8 per cent
Most euro zone bond yields were flat, with Germany’s 10-year yield falling to -0.25 per cent, below two-week highs around -0.17 per cent.
Benchmark 10-year notes last fell 7/32 in price to push their yield up to 1.832 per cent.
Longer-term yields also may have risen because of Thursday’s announcement the U.S. Treasury will begin issuing a new 20-year bond in coming months as it seeks to plug budget deficits expected to top $1 trillion annually.
U.S. gold futures settled up 0.6 per cent at $1,560.30 an ounce.