World shares, gold, and copper began the week near record highs, buoyed by investor optimism driven by slower inflation, economic growth, and China’s proactive measures to address its property crisis.
Gold surged over 1% to a record $2,449.89 per ounce. Meanwhile, three-month copper on the London Metal Exchange climbed as much as 4.1%, reaching a historic high of $11,104.50, following a 28% increase so far this year.
Analysts at Rabobank noted the concurrent rally in gold and copper, pointing out their typically divergent signals: copper reflects the economic outlook due to its industrial significance, while gold serves as a broader sentiment indicator. They suggested that central banks’ increased bullion holdings and a shift of household savings from stocks to commodities contributed to these moves.
Additionally, anticipated demand for commodities from China bolstered copper prices. On Friday, China announced “historic” measures to stabilize its property sector, including 1 trillion yuan ($138 billion) in extra funding facilitated by the central bank, and local governments purchasing apartments. On Monday, Beijing maintained benchmark rates as expected.
Bright Spots in Global Markets
MSCI’s broadest index of Asia-Pacific shares outside Japan reached its highest level in two years on Monday, while the world share index hovered just below Thursday’s all-time peak. Blue-chip indexes in France, Britain, and Germany, which set records last week, rose by 0.2-0.5%.
“Global economic bright spots continue to prevail,” remarked Vincent Chaigneau, head of research at Generali Investments, citing easing inflation and rising wages that support real disposable income and bolster domestic demand.
US inflation data released last week showed a slight slowdown in April, prompting markets to cautiously position for a potential rate cut by the Federal Reserve in September, thereby driving a cross-asset rally. Upcoming British inflation data, due Wednesday, will be pivotal in determining if the Bank of England will cut rates in June or August, coinciding with expected easing from the European Central Bank.
This week also sees key events including results from Nvidia, global business activity data, a New Zealand rate decision, comments from US policymakers, and the minutes from their latest meeting.
US Treasury yields ended last week with two-year yields down four basis points to 4.825%, remaining steady on Monday, while ten-year yields decreased by 8.4 basis points to 4.42%.
