Global stock markets extend record-breaking rally

(iStock)
(iStock)

London - World stock markets rallied further on Thursday on a bright economic outlook and strong oil prices, with London clinching a new record peak.

"It's onwards and upwards for global stock markets," said Lee Wild, head of equity strategy at online stockbroker Interactive Investor.

"With economic data underpinning forecasts for strong global growth in 2018, traders are happy to keep buying risk assets."

London's benchmark FTSE 100 shares index of top companies scored a record-high intra-day peak in morning deals, hitting 7 698.48 points, before paring gains.

Frankfurt's DAX 30 and the Paris CAC 40 also charged higher, with the energy sector jumping on higher crude oil prices.

Strong oil

"There are further gains for oil shares which continue to ride the coat-tails of a further increase in crude prices to levels not seen since mid-2015," added Wild.

"There have been major outages over the past few months in the North Sea and Libya, and now markets are pricing in an outside chance that domestic tension in Iran could threaten supply."

Wall Street also powered ahead again at the opening bell in New York, building on the previous day's record performance.

In Asia, Tokyo led another broad rally as soaring oil prices fuelled bumper gains for energy firms.

Japan's Nikkei index ploughed more than 3% higher on its first trading day for 2018 as investors played catch-up with two days of advances elsewhere.

Oil prices sprang to three-year highs on the back of a big freeze in the United States, tensions between major producers Iran and Saudi Arabia, and a weaker dollar.

Both main contracts jumped around 2% on Wednesday and extended those gains somewhat on Thursday.

"Geopolitics has become a bigger factor now that the Iranian protest movement has launched into the open in the past week," added AxiTrader chief market strategist Greg McKenna.

He added: "My sense is there is some expectation that President Trump may use the protests as a pretext to reimpose sanctions on Iran and possibly unwind the deal the previous administration did which allowed Iran to increase its exports.

"That would take a significant number of barrels per day out of the market."

Dollar pain

The dollar meanwhile held on to most of the previous day's gains against the yen, but lost ground against the pound and the euro after minutes from the Federal Reserve's December meeting showed policymakers upbeat about the outlook for the world's top economy, which could lead to several further interest rate hikes.

"This is certainly shaping up to be another painful trading week for the dollar," observed FXTM analyst Lukman Otunuga. "Bulls were nowhere to be found during Thursday's trading session, despite the release of yesterday's somewhat hawkish Federal Reserve minutes."

While analysts said the board was divided over the speed of rises, they were confident Trump's tax cuts could boost consumer spending.

But overall the minutes "had little impact on financial markets", noted MUFG analyst Lee Hardman.

"The minutes provided little further insight into the outlook for Fed policy beyond which was already communicated back in December."

Eyes are now on the release of US jobs data on Friday.

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