Stocks gain on optimism over recovery

NEW YORK: Global stock markets made moderate gains on Monday as increasing confidence about the rapid recovery of economies from the COVID-19 pandemic offset concerns about the speed of the market’s rally.

The start to the week was quiet as investors refrained from taking on large positions before a two-day meeting of the Federal Reserve that will begin on Tuesday and the impending release of US quarterly gross domestic product data.

Investors have been ebullient in recent weeks, with Wall Street hitting another intraday record high on Friday and European shares not far off their own record highs.

In morning trading on Wall Street, the Dow Jones Industrial Average rose 64.86 points, or 0.19 percent, to 34,108.35, the S&P 500 gained 12.33 points, or 0.29 percent, to 4,192.5 and the Nasdaq Composite added 51.01 points, or 0.36 percent, to 14,067.81.

The pan-European STOXX 600 index rose 0.32 percent and MSCI’s gauge of stocks across the globe gained 0.39 percent.

Asian shares rallied. MSCI’s broadest index of Asia-Pacific shares outside Japan closed 0.58 percent higher, while Japan’s Nikkei rose 0.36 percent.

That MSCI’s helped gauge of stocks across the globe, which gained 0.39 percent.

Stocks — as well as most other risk assets — have ridden a massive rally. The MSCI world index has registered only three down months in the past 12 and is up nearly 5 percent this month and 9 percent for the year as investors bet on a rapid post-pandemic economic rebound turbocharged by vast government and central bank stimulus.

Analysts, however, say stocks look a little over-valued and that the rally will run into hurdles after setting such a lightning pace and with so much of the economic recovery and fiscal stimulus splurge already priced in.

“The real crux of the issue, however, is ‘What’s in the price?’ The year-to-date rally has increasingly eliminated upside to our targets,” noted Andrew Sheets, a strategist at Morgan Stanley.

“Across four major global equity markets (the US, Europe, Japan and emerging markets), only Japan is currently below our end-2021 strategy forecast.