By Katanga Johnson
WASHINGTON - World shares extended near-record highs on Monday as risk assets found support from an upbeat U.S. October payrolls report and investors faced positive readings on U.S. inflation ahead of more detailed consumer prices this week.
Short-term inflation expectations increased in October, according to survey findings released by the New York Federal Reserve on Monday, and consumers' expectations for how much money they will earn and spend over the next year rose to the highest level in eight years.
Median expectations for what inflation will be one year from now rose in October for the 12th straight month to 5.7% from 5.3% in September, reaching a new high for the survey launched in June 2013. However, medium-term inflation expectations for what inflation will be in three years remained unchanged in October at 4.2% after three consecutive months of increases.
The U.S. congressional passage on Saturday of a long-delayed $1 trillion infrastructure bill also cheered investors, helping crude prices extend their rally, though a broader social safety net plan remains elusive.
Data out over the weekend also showed China's exports beat forecasts in October to deliver a record trade surplus, although a miss on imports added to evidence of a slowing in domestic demand.
The Dow Jones Industrial Average hit a record high on Monday - up 0.47% - as the passage of a $1 trillion infrastructure bill lifted equities. The S&P 500 was up 0.19% and the Nasdaq Composite was up 0.16%.
Tesla Inc fell 4.4% after CEO Elon Musk tweeted on Saturday he would sell 10% of his holdings if users of the social media network approve the proposal. Around 57.9% of the people voted "Yes."
"The majority voted for him to sell, which effectively signals that he is going to dump stock on the market," said Russ Mould, investment director at AJ Bell.
The pan-European STOXX 600 index rose 0.06%.
World shares gained 0.20% after hitting a record high last week as relatively dovish central bank messages and the strong labor data in the United States added to optimism generated by a healthy earnings season on both sides of the Atlantic.
Tightness in the labor market combined with dislocation in global supply chains should result in another high reading for U.S. consumer prices due on Wednesday, with any upside surprise likely to rekindle talk of an earlier Federal Reserve hike.
After some wild swings, Treasuries still managed to end last week with a rally, thanks partly to a huge drop in UK bond yields where short-dated debt enjoyed its best week since 2009 after the Bank of England skipped a chance to hike.
Traders sent most U.S. Treasury yields higher on Monday ahead of note and bond auctions this week.
The benchmark 10-year yield was up 2.1 basis points at 1.474% in morning trading.
Meanwhile, the dollar slipped on Monday, falling below the 15-month highs it hit after Friday's jobs data, as investors reassessed rate hike expectations and central banks' tolerance of inflation.
The dollar index fell 0.191%, with the euro up 0.19% to $1.1588.
The retreat in bond yields was a boon for gold, which offers no fixed return, and lifted it to as high as $1,821.26 an ounce on Monday before turning flat on the day.
Cryptocurrencies, which like gold pay no coupon and are seen as a possible hedge against inflation, saw ether hit a record peak and bitcoin jumping to a three-week high.
Ether - which underpins the ethereum network - hit a record top of $4,768.07 and was last up 2.6% on the day, while bitcoin rose 4% to $65,851.
Bitcoin last rose 4.39% to $66,078.33
Oil prices firmed as the passage of the U.S. infrastructure bill and China's export growth supported the outlook for energy demand, while Saudi Arabia's state-owned producer Aramco raised the official selling price for its crude.
U.S. crude recently rose 0.91% to $82.01 per barrel while Brent was at $83.52, up 0.94% on the day.
Spot gold added 0.3% to $1,822.86 an ounce.
