By Riva Gold
Global markets held firm Friday while U.S. stocks were poised to notch fresh records as markets reopened after the Thanksgiving holiday.
The Stoxx Europe 600 was unchanged in light afternoon trading, hovering around a one-month high, while Asian markets closed with modest gains.
Futures pointed to a 0.2% opening gain for the S&P 500, after the Dow Jones Industrial Average, S&P 500 and Russell 2000 all closed at records for a third consecutive session on Wednesday before the Thanksgiving holiday.
U.S. stocks are set to close out their third straight week of gains amid expectations for reduced corporate taxation and regulation and greater infrastructure spending.
"I think the U.S. stock market can run further, because you have the possibility of stronger growth in the U.S. driven by fiscal easing and increased business investment," said Philip Chandler, a fund manager at Schroders.
Supporting the rally on Wall Street, money has also continued to pour out of government bonds, U.S. real estate and gold funds, and into the U.S. equity market in the most recent week, according to fund-tracker EPFR Global.
"A lot of people point to the U.S. election as the turning point," said Norman Villamin, chief investment officer at Union Bancaire Privée, "but I see it more as an acceleration of an existing trend," he said. "This is really what we look at as a consequence of a normalization of [U.S. interest rate] policy."
Investors expect the Federal Reserve to raise interest rates in December and again in 2017.
The yield on the 10-year Treasury note rose to 2.375% on Friday from a one-year closing high of 2.355% on Wednesday, amid concerns about higher inflation and interest rates. Yields move inversely to prices.
The bond market is due to close early on Friday.
In Europe, German 10-year yields were little changed on Friday at 0.233%. German bond funds recorded their biggest outflow since 2009 in the most recent week, according to EPFR Global, following a media report that the European Central Bank will lend more of its holdings to regional banks.
After a multidecade government bond market rally, "we're all asking ourselves if this is the big paradigm shift or not," said Mitul Patel, head of rates at Henderson Global Investors. While many investors are convinced there will be higher U.S. inflation next year, questions remain on the outlook for growth.
In currencies, the dollar was last down 0.7% against the yen and 0.5% against the euro. The WSJ Dollar Index, which measures the dollaragainst a basket of 16 currencies, edged down 0.3% on Friday after settling at its highest level since 2002.
The stronger dollar "doesn't start to bite yet," said Mr. Chandler, but if it continues to appreciate at this pace in 2017 it may hurt corporate profits, he said.
In commodities, oil prices declined on Friday, weighing on shares of energy and mining companies. Brent crude oil was down 1.1% at $48.48 a barrel ahead of next week's meeting of the Organization of the Petroleum Exporting Countries, where producers are expected to reach a deal to curb output.
Earlier, shares in Asia advanced in low volume trading, with Japan's Nikkei Stock Average hitting a 10-month high as a recent decline in the yen against the dollar boosted exporters' shares.
"The Japanese story is much stronger to us," said Mr. Villamin. He prefers Japanese equities to those in Europe, as the country faces fewer political headwinds, its companies are generating earnings growth and fiscal policy may prove more supportive.
Markets in Hong Kong and Shanghai rose 0.5% and 0.6% respectively, while Australian stocks added 0.4%.
Kenan Machado contributed to this article.
Write to Riva Gold at firstname.lastname@example.org
(END) Dow Jones Newswires
November 25, 2016 09:09 ET (14:09 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.