Global Stock Rally Lives On Amid Earnings Optimism

• Global Stock Rally Lives On Amid Earnings Optimism

Global stocks extended gains to a third day after corporate results and hopes of U.S. tax reform boosted optimism for growth. Weakness in the yen lifted Japanese equities to the longest winning streak of the year.

The MSCI All-Country World Index is adding to a record high amid strong earnings from the likes of Daimler AG, Aluminum Corp. of China Ltd., Caterpillar Inc. and McDonald’s Corp. Emerging-market stocks climbed to the highest in almost two years, while the dollar rose for a second day. The yen extended losses while gold held declines. European shares retreated after a five-day rally.

“Confidence has returned and the yen has fallen back in value,” said Shane Oliver, head of investment strategy at AMP Capital Investors in Sydney. “Markets seem a lot more relaxed. Globally, we’re seeing a lot of risk-on.”

More than $700 billion has been added to global equities this month as European political risk abated and the U.S. economy continues to show signs of improvement amid better-than-forecast earnings results. U.S. President Donald Trump is expected to unveil a tax plan on Wednesday that would cut the upper corporate rate to 15 percent.

Risks remain as investors await central bank meetings this week in Japan and Europe. Tensions around North Korea continue to simmer. And in China, concerns of a crackdown from regulators has left the world’s second-largest stock market trading near a four-month low.

Here are some key upcoming events that investors are watching:

• Alphabet Inc., Microsoft Corp., Amazon.com Inc., Twitter Inc., Intel Corp., Barclays Plc, Bayer AG and Total SA are among major companies releasing results this week.
• The Bank of Japan is widely expected to keep the settings on its monetary easing program unchanged at the end of a two-day policy meeting on Thursday. Though inflation remains well below the central bank’s 2 percent target, it’s ticking up.
• The European Central Bank sets monetary policy later that same day. With officials indicating little chance of a policy change, the focus will be on any signals from President Mario Draghi that the ECB is starting to discuss an exit from its extraordinary stimulus.
• U.S. GDP is due at the end of the week. It’s projected to show the economy expanded at a 1.0 percent annualized rate in the first quarter, the weakest pace in a year.