By Herbert Lash
NEW YORK (Reuters) – A gauge of global equity markets hovered off a record peak on Monday as technology shares took in stride a deal by the world’s richest nations on a corporate tax aimed at U.S. tech heavyweights, and oil prices jumped to a two-year high.
Graphic: Global asset performance http://tmsnrt.rs/2yaDPgn
Graphic: World FX rates http://tmsnrt.rs/2egbfVh
Oil climbed above $72 a barrel, extending this year’s rally built on rising recovery demand and supply curbs from the Organization of the Petroleum Exporting Countries and its allies, before giving up the gains as investors took profits.
U.S. Treasury and euro zone government bond yields edged up in largely subdued trade ahead of a European Central Bank meeting on Thursday, the same day highly-anticipated U.S. inflation data will be released.
The 10-year U.S. Treasury note rose 0.1 basis points to yield 1.5704%, at the bottom of a two-month range.
Germany’s 10-year Bund yield was last up 0.2 basis points at -0.195, near one-month lows hit after Friday’s U.S. unemployment report. The jobs data showed a solid pick-up in hiring but not enough to stir fears of an overheated economy that would lead to tighter U.S. monetary policy.
The big tech firms, in the crosshairs of the G7 agreement on Saturday that seeks a minimum global corporate tax rate of at least 15%, can expect slightly more predictability in their future tax obligations, said Christopher Smart, chief global strategist at Barings.
A period of unilateral taxes and punitive tariffs from both the United States and European Union has been avoided for the moment, Smart added.
On the political front, it appears the agenda of U.S. President Joe Biden may be stuck if he’s unable to change the filibuster rule in the Senate, said Ed Moya, senior market analyst at OANDA in New York.
“We’re getting lower volatility and that’s leading to a very difficult market to trade or to get excited about,” Moya said of the rangebound equities market.
“The market is going to have to wait a few months to get some clarity on the labor market recovery and whether these pricing pressures will be persistent,” he said.
MSCI’s all-country world equity index rose 0.09% to 716.94. The benchmark for global equity markets is heavily weighted to the U.S. tech behemoths, half of which rose and the others fell.
In Europe, advancing automakers more than offset early declines in commodity-linked shares sparked by downbeat China export data.
Chinese copper imports fell 8% in May from the previous month as record-high prices further eroded buying interest while overall export growth missed analysts’ forecasts.
Three-month copper on the London Metal Exchange shed 0.3% to $9,925 a tonne.
The European automobiles and parts index rose 0.9% to reach its highest since March 2015, extending a 5.3% rally from last week.
Euro zone banks were broadly higher as government yields were steady near one-month lows ahead of the ECB meeting on Thursday when policymakers are expected to stick to their dovish policy stance.
Gold prices firmed as the dollar retreated, with the dollar index down 0.2% while the euro was up slightly against the dollar, at $1.2196.
The Japanese yen strengthened 0.23% versus the greenback at 109.25 per dollar.
Crude has risen for the past two weeks, with Brent up 38% this year and West Texas Intermediate, the U.S. benchmark, rising 43%.
U.S. gold futures settled up 0.4% at $1,898.80 an ounce.
Overnight in Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan slipped 0.08%, while Japan’s Nikkei edged up 0.3% and touched its highest in almost a month.
Taiwan stocks lost 0.4% as a spike in COVID-19 cases hit three tech companies in northern Taiwan, including chip packager King Yuan Electronics.
Global Markets: Stocks hover near record highs, oil hits two-year high