Global stocks breach fresh milestones

Friday 21:00 BST. Global stock markets ended the week on a strong note, with the S&P 500 back within striking distance of its record high, European equities at 15-year peaks and the Nikkei 225 in Tokyo briefly climbing back above 20,000 for the first time since 2000.

Wall Street's latest push higher came as General Electric unveiled plans to sell the bulk of its finance arm and return up to $90bn to shareholders through stock buybacks and dividend increases over the next three years.

The S&P 500 equity index rose 0.5 per cent to 2,102, leaving it about 0.7 per cent below last month's record close and giving it a weekly gain of 1.7 per cent. GE shares rose more than 10 per cent.

The news from GE helped equity bulls shrug aside worries about first-quarter corporate earnings and the renewed appreciation of the dollar. Energy stocks got a lift from a 2.3 per cent rise for Brent crude oil to $57.87 a barrel - leaving it 5.3 per cent up over the week.

Across the Atlantic, the FTSE Eurofirst 300 index rose 0.9 per cent to its highest finish since October 2000 - up 3.7 per cent over the holiday-shortened week - while the Xetra Dax in Frankfurt and London's FTSE 100 both ended at record peaks.

In Japan, the Nikkei touched 20,006 before turning tail and finishing 0.2 per cent lower at 19,907, although it rose 2.4 per cent over the five-day period. Hong Kong stocks made notable gains this week, with the Hang Seng's 1.2 per cent gain on Friday giving a three-day advance of 7.9 per cent.

US market participants appear to have taken the view that last week's unexpectedly soft employment report for March - which showed the first sub-200,000 monthly rise in non-farm payrolls in a year - was not the beginning of a trend.

The dollar, which fell sharply in the wake of the jobs data, was up 0.2 per cent against a basket of currencies on Friday, giving it a five-day rise of 2.9 per cent and putting it back in sight of a recent 12-year high. The euro was down 0.5 per cent on the day at $1.0601, after touching $1.10 a week ago.

"What has caused the bullish sentiment toward the dollar to return with a vengeance is the growing acceptance of the view that the relative softness of the US economic data over the past month or so was mainly the result of special circumstances, which have not derailed the forward momentum of the economy or altered materially the course for the rate normalisation process," said Anthony Karydakis, chief economic strategist at Miller Tabak.

"Supporting the latter were statements earlier in the week by New York Fed president Bill Dudley and Fed governor Jerome Powell to the effect that a June rate hike is not completely off the table if the upcoming economic reports show significant strength."

There was a view in some quarters that the weak US jobs number might have been due to companies struggling to hire the right people, after more than four years of solid employment growth and declining unemployment rates.

"If that is so, we should start to see more evidence of wage growth picking up in the months ahead," said Chris Iggo at Axa Investment Managers.

"It would be ironic if a weaker data point on employment growth was a signal that the economy was close to full employment and that interest rate hikes should start soon."

The minutes of the Fed's Open Market Committee meeting last month - released on Wednesday - showed that policy makers were split over when borrowing costs should rise, but played to expectations that rates would rise this year - with September viewed by many as the most likely "lift-off" point.

The US government bond market moved to price in the prospect of higher rates. The yield on the 10-year Treasury, although down 1 basis point at 1.95 per cent on Friday, was up 11bp over the week. The two-year yield, up 1bp at 0.56 per cent, was 8bp higher than a week earlier.

Gold, up $13 on Friday at $1,207 an ounce, was down $3 on the week.

Meanwhile, the German 10-year Bund yield hit a record low of 0.14 per cent this week before pulling back to 0.16 per cent, flat on the day and 2bp down over the five-day period.

The move reflected the ongoing impact of the European Central Bank's asset purchase programme, as well as lingering worries over Greece's debt negotiations, even after Athens repaid a €450m International Monetary Fund loan.

Switzerland broke new ground this week by becoming the first nation to issue 10-year debt with a negative yield.

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