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* MSCI World index up 0.2% to fresh record high
* Earnings beats help outweigh COVID-19 caution
* Dollar, Treasuries languish, eye U.S. employment data
By Simon Jessop
LONDON, Aug 4 (Reuters) - Global shares rode earnings to a
record high on Wednesday, while the dollar and Treasury yields
languished in the wait for U.S. employment data to provide clues
to the pace of monetary tightening in the world's biggest
economy.
Strong corporate profits have eased concerns over the
COVID-19 pandemic, as vaccine roll-outs continue apace in
developed markets, despite a resurgence of cases in Asian
countries including China.
While that has helped buoy equities, inflationary pressures
and a growing belief the U.S. Federal Reserve may soon signal
its intention to trim support to the economy continue to cause a
tussle with the bond market over mid-term direction.
"Macro data is coming at high expansionary levels but
currently all the market is seeing is peak data. It wants to
know what's going to be the glide path over the next 12 months.
Those concerns are playing out in the bond market," said Grace
Peters, EMEA head of investment strategy at J.P. Morgan Private
Bank.
"When it comes to the equity markets, you have more balance,
as lower yields support equities, especially the growth part of
the equity market. At the same time, there is strong bottom-up
evidence that life is good for corporates."
The MSCI World index, a broad gauge of
equity markets, was last up 0.2%, tracking overnight gains in
Asia, where the equivalent index, excluding Japan
rose 1%.
Across Europe, the STOXX Europe 600 and FTSE 100
were up 0.4%-0.6%, with the latter supported by strong
results from housebuilder Taylor Wimpey and insurer Legal
and General.
U.S. stock futures pointed to a quiet open on
Wall Street, hovering either side of flat.
Close to 90% of companies listed on the S&P500 have reported
positive earnings surprises for the second quarter, National
Australia Bank (NAB) economist Tapas Strickland said.
"Aside from (the) healthy earnings outlook, we also see
equities being supported by continued monetary stimulus from the
Federal Reserve and the attractiveness of stocks relative to low
bond yields," said Mark Haefele, Chief Investment Officer, UBS
Global Wealth Management in a note.
Investors expect volatility to increase in August as more
companies report earnings and the market hears from Federal
Reserve officials in coming weeks.
While all eyes will be on the latest U.S. non-farm payroll
numbers on Friday - the last before U.S. central bankers convene
at Jackson Hole to discuss policy - markets are also set to take
a hint from Wednesday's U.S. ADP employment survey.
Ahead of the data, the U.S. dollar was up 0.1% against a
basket of currencies while benchmark Treasury yields
were up 1 basis point at 1.182%.
Elsewhere in currencies, the pound was up 0.2% against the
dollar while the euro was flat. Bitcoin was
down 0.8% at just under $38,000, with ethereum down 0.1%,
paring early losses ahead of a network upgrade.
Euro zone government bond yields hovered near recent lows,
with the German 10-year yield at -0.489%, little
moved by July euro zone purchasing managers index survey data
that came in slightly worse than expected.
In commodities, Brent futures gave up early gains to
last trade 0.2% lower at $72.30 a barrel, while U.S. crude
was down 0.4% at $70.26 a barrel.
Spot gold was up 0.2% at $1,812.9 an ounce.
(Additional reporting by Sujata Rao and Swati Pandey; Editing
by Sam Holmes, Barbara Lewis and Emelia Sithole-Matarise)
