ALSO READOur December forecast for the Sensex is 30,000: Sanjay Mookim Foreign brokerages bullish on Indian markets; growth stocks to lead Wall Street opens higher as energy, financial stocks rise European stocks, bond yields fall after Fed flags weak US inflation Full coverage: Fed to unwind bloated balance sheet, signals Dec rate hike
World stock markets hovered close to all-time highs on Monday as the best start to a year in eight years showed little sign of running out of steam, with the combination of strong global growth and low inflation powering the appetite for risk.
Wall Street last week posted its best start to a year in more than a decade; Friday's US jobs report, while weaker than expected, encouraged hopes that brisk growth and low inflation can be sustained this year.
The world index was flat, just below record highs. It has gained 2.5 per cent in the first five trading sessions of the year, its best start since 2010, according to Thomson Reuters data.
The US dollar recovered after a weak start to the year, strengthening past the key level of $1.20 against the euro, although with bearish positions against the greenback high, many traders are betting on a stronger single currency.
Positive euro zone economic data - with economic growth in the euro zone is on its best run in a decade - has helped the euro, and investors globally wanting exposure to the economic recovery in the region have piled into European assets.
The synchronised global recovery has prompted central banks across the world to follow the Federal Reserve's lead and start moving towards tighter monetary policy in recent months, supporting their currencies against the dollar.
"The overall trend is minutely supportive for the US dollar as we are seeing a global recovery led by China and Europe and there is a lot of cash sitting on the sidelines, waiting to buy European assets," said Peter Chatwell, head of European rates strategy at Mizuho International in London.
Euro zone blue chip stocks were up 0.23 per cent, with France's CAC 40 ahead by 0.3 per cent and Germany's DAX ahead by 0.31 per cent.
Wall Street has already enjoyed its best start to a year in more than a decade, with the Dow up 2.3 per cent last week and the S&P 500 2.6 per cent. The tech-heavy Nasdaq led the charge with a rise of 3.4 per cent.
Attention in the US will turn to the quarterly earnings season, which kicks off this week with the Street expecting solid growth of around 10 percent.
Analysts at Bank of America Merrill Lynch said that the global economy had entered 2018 "firing on all cylinders".
"This growth is keeping our quant models bullish and driving earnings revisions to new highs," they added. "We stay long outside the US, with Asia ex-Japan and Nikkei our growth plays, Europe still for yield."
In commodity markets, many commodities paused after the recent run-up in prices, supported by a broadly weak US dollar and the rise in global growth expectations.
Gold prices dipped after the dollar gained, with spot prices down 0.1 per cent. The precious metal has posted four consecutive weeks of gains.