Lucky 13? Global stocks score longest run of monthly gains on record

LONDON: A dive in high-flying U.S. tech stocks on worries their boom may have peaked left investors wondering on Thursday whether the longest global equity bull run in living memory might be starting to splutter.

The caution was sparked by an overnight Wall Street wobble involving a rotation from tech to financials and came just as the near 9-year global rally notched up another impressive milestone.

The world’s broadest equity gauge – the MSCI all-country index – was on course to finish November with its 13th straight monthly gain – the longest such winning streak in the index’s 30-year history. Lucky for some.

Though the celebrations were muffled slightly by the tech problems - China stocks had also taken another tumble in Asian trading - the mood seemed to be improving again in Europe.

Germany`s Dax and France`s CAC 40 both inched up for a third day, though London`s FTSE was back in the red as hopes of a breakthrough in Brexit negotiations pushed the pound higher again.

"I`m not sure one would say it`s a bubble (in tech stocks)," said Andrew Milligan, head of investment strategy at Standard Life. "By and large the companies are generating either good profits or the potential for good profit growth".

But "Tech is a sector unto itself... it`s utterly a view about barriers to entry."

Possibly weighing on tech were concerns, sparked by a Morgan Stanley report earlier this week, that the "super-cycle" in memory chip demand looks likely to peak soon.

Shares of Amazon.com, Apple, Google parent Alphabet and Facebook fell between 2 percent and 4 percent. Among the year`s other high fliers, Netflix slid 5.5 percent while Asia`s bellwether Samsung slumped 4.3 percent to two-month lows.

The Nasdaq index is still up 26.8 percent so far this year, roughly 7 percentage points above gains in the MSCI world.

"It is true that if you look at the world`s semiconductor sales on chart, their year-on-year growth appears to be peaking out," said Hiroshi Watanabe, an economist at Sony Financial Holdings.

"But if you look at what`s driving demand, it`s not just smart phones and actually a lot of things."

The tech nerves were not just confined to stocks. Rocketing cryptocurrency Bitcoin dropped a cool $1,000 to a low of $9,250 before clawing back nearly 3 percent in Asia and Europe to around $10,100.

DOLLAR IN THE DOLDRUMS

In the more mainstream FX markets, the U.S. dollar climbed against the yen but dipped against the euro and the pound. Measured against major peers it is headed for biggest monthly drop since July.

The U.S. Senate on Wednesday took a step toward passage of tax legislation that is a top White House priority, setting up a likely decisive vote later this week.

Investors also seem to have grown cautious about the outlook of the world`s biggest economy and there are growing signs that it certainly won`t be the only country raising interest rates.

J.P. Morgan Asset Management global head of rates David Tan predicted on Thursday that there will be some 1,000 rate hikes globally over the next decade.

"The current period of economic expansion has therefore been extraordinarily long, almost 10 years and counting, but we know that the days of super low global central bank rates are in the process of coming to an end," he said.

Borrowing costs in Germany, the euro zone`s benchmark bond issuer, rose to their highest in just over two weeks. The 10-year U.S. Treasuries yield climbed too, reaching 2.389 percent to near this month`s high of 2.414 percent.

There was no immediate market response after U.S. President Donald Trump nominated Carnegie Mellon University professor Marvin Goodfriend, viewed as a policy hawk, to be a member of the Federal Reserve Board of Governors.

Oil meanwhile moved cautiously ahead of an OPEC meeting in Vienna later in the day, with members set to debate an extension of the group`s supply-cut agreement.

While the Organization of the Petroleum Exporting Countries and key non-member Russia look set to prolong oil supply cuts until the end of 2018, they have signalled that they may review the deal when they meet again in June if the market overheats.

U.S. crude futures traded at $57.41 per barrel in early European trade, up 0.2 percent, while Brent futures rose 0.6 percent to $63.50 a barrel.