LONDON: Global shares and the dollar rose on Friday, buoyed by upbeat US data the previous day, while Ukraine’s currency and bonds firmed on hopes that plans to end a violent crisis there would bear fruit.
European stocks pushed higher, tracking gains in Asia and on Wall Street after Markit’s flash US Manufacturing Purchasing Managers Index on Thursday hit its highest since May 2010, reinforcing investor confidence economic recovery was on track.
US stocks looked set to open higher with index futures higher.
“There are some warning signs but … for the US and Europe we remain constructive,” Matthias Thiel, market strategist at Hamburg-based M.M. Warburg. “From our point of view there are no good reasons why the economic cycle might be over and we get a downturn.”
The dollar rose against the yen as the data underpinned hopes for sustained economic strengthening. The euro held steady to the US currency having been hit by sub-forecast data on Thursday.
Higher US Treasury yields — 10-year bonds yielded 2.76 percent compared with 2.75 percent in late US trade — also supported the dollar.
German 10-year yields, the euro zone benchmark, fell 2.7 basis points to 1.67 percent as investors focused on the patchy European numbers, which some said could make further monetary easing by the European Central Bank more likely.
“There’s still a lot of uncertainty about the state of the global economy. The China and euro zone PMI data wasn’t particularly great and that leaves the door open for ECB action,” said Alan McQuaid, chief economist at Merrion Stockbrokers.
In Ukraine, President Viktor Yanukovich unveiled plans to hold early presidential elections and form a national unity government.
While it was unclear if the opposition would accept such a deal to end a crisis that has killed at least 77 people, Ukraine’s hryvnia currency rose to 8.83 per dollar, lifting off Thursday’s five-year low of 9.085. Its dollar bond prices rose and debt insurance costs fell.
The announcement also supported nearby emerging markets in Turkey and Central and Eastern Europe.
Standard and Poor’s cut Ukraine’s credit rating for the second time in three weeks, lowering it by one notch to triple-C and saying there was an increased risk of default.
Neighbouring Russia’s rouble edged up to 41.76 against the dollar-euro basket, off record lows set on Wednesday.
China’s yuan hit its lowest since early October in offshore trade, falling past 6.10 per dollar. Earlier, dealers said the central bank has abruptly signalled the market to prepare for more volatility in preparation for reform.
Most other Asian emerging market currencies rose.
MSCI’s main index of emerging markets stocks was up 0.7 percent, reversing a fall on Thursday when data showed Chinese factory activity contracting.
MSCI’s all-country world equity index, which tracks shares in 45 countries, rose 0.3 percent. The index has risen 6 percent since early February and is a whisker away from a six-year high hit in early January.
The FTSEurofirst 300 index of top European shares gained 0.3 percent to 1,342.24 points.
Earlier Japan’s Nikkei index closed 2.9 percent higher and MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.83 percent.
The US S&P 500 index ended up 0.6 percent on Thursday. The stock market has largely pinned recent weak data on the impact of extremely cold weather rather than worsening fundamentals.
The dollar rose against a basket of currencies and firmed 0.2 percent against the yen, which last traded at 102.40 to the greenback.
The euro was steady at $1.3707, having hit a seven-week high of $1.37735 on Wednesday.
Market participants were also watching for developments from this weekend’s Group of 20 meeting of finance ministers and central bank chiefs in Sydney, at which global growth and recent turmoil in emerging markets are expected to be in focus.