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World stocks at record high after month-long surge

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Bond markets buoyed by U.S. rate cut hopes

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Chinese markets lifted by property sector speculation

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Yen enjoys respite from dollar strengthGraphic: World FX

rates http://tmsnrt.rs/2egbfVh

By Marc Jones

LONDON, May 16 (Reuters) - World stocks scored a third

straight record high and bond markets were rallying on Thursday

as galvanized hopes of interest rates cuts in the United States

and other major economies extended a month-long global bull run.

Investors were still basking in the glow of Wednesday's mild

U.S. inflation data and growing optimism in Asia that China was

finally looking at the kind of measures that might ease its

property crisis.

MSCI's benchmark world stocks index, which

tracks 47 countries, was up for a sixth straight day, Wall

Street futures were pointing higher and the STOXX 600

was looking to take Europe's winning streak to 10 days, the

longest since August 2021.

Japan's yen was enjoying more respite from the dollar while

U.S. benchmark government bond yields -

which drive the global cost of borrowing - hit one-month lows on

bets the U.S. might now cut its interest rates twice this year.

"The prospect of the (U.S) inflation pressures easing was

enough for the market to be quite enthusiastic, let's put it

that way," Rabobank's Head of Macro Strategy Elwin de Groot

said.

"Also, up until not too long ago, the market was focused on

the U.S. outperforming Europe on many fronts. But now that has

almost started to reverse," he added, pointing to another

monthly improvement in euro zone industrial production data.

Overnight in Asia, Chinese and Hong Kong property shares had

rallied as well after reports that Beijing was considering a

plan for local governments to buy up millions of unsold homes

across the country.

The CSI 300 real estate index and mainland

property developers traded in Hong Kong jumped 3.5% and

4.9%, respectively, while the yuan rose as the U.S.

dollar wilted in the wake of Wednesday's inflation data.

The U.S. currency was at fresh multi-week lows against the

euro and sterling in Europe too. U.S. Treasury yields

also extended their retreat, sinking to six-week troughs. That

in turn helped the yen's recent recovery despite data showing

the Japanese economy contracting more than expected.

HATS AT THE READY

U.S. stock index futures were fractionally higher after the

S&P 500, Dow Jones Industrial Average and Nasdaq had all notched

individual all-time high finishes the previous day.

The rates market is now back to betting on two quarter-point

interest rate cuts from the Federal Reserve this year, with

traders seeing a 72.6% chance of the first one in September,

according to the CME FedWatch Tool.

Dow bulls are on hoping it will break the 40,000-mark for

the first time later. If it does it would mark the blue-chip

index's fastest ever 10,000-point climb having also been powered

up by a robust company earnings season in recent weeks.

For FX followers, the dollar had slipped to 154.62 yen

in Europe from as high as 156.55 in the previous

session.

Gold bugs were inching the precious metal back towards

record levels and oil pushed up again after rebounding strongly

overnight from a two-month trough.

Wider volatility gauges like the VIX have also been

sunk by the recent market surges and Close Brothers Asset

Management Chief Investment Officer Robert Alster said the U.S.

inflation data had been a huge relief for the rate cut hopefuls.

"It has led to quite a big move in the markets," Alster

said, "which is very good for those of us that are positioned

marginally overweight in equities".