GLOBAL MARKETS-World shares resilient, drugmakers hit by Biden's move on vaccines

  • Reuters
  • Stock Market News
GLOBAL MARKETS-World shares resilient, drugmakers hit by Biden's move on vaccines
Credit: © Reuters.

* Cyclical shares, commodities advance on normalisation hopes

* Drugmakers down in China, U.S. after Biden vaccine move

* Pound eyes BoE, Scottish election

* European stock index seen opening flat

* Global asset performance

* World FX rates

By Hideyuki Sano

TOKYO, May 6 (Reuters) - World shares and commodity prices held firm on Thursday as investors switched to cyclicals amid hopes of a strong economic recovery, but drugmakers' shares came under pressure after Washington backed waiving patents for COVID-19 vaccines.

MSCI's broadest gauge of world stocks, ACWI .MIWD00000PUS , was up slightly and European stocks are expected to open flat with both Euro Stoxx futures STXEc1 and Britain's FTSE futures FFIc1 little changed.

Japan's Nikkei .N225 jumped 1.8% as it reopened after a five-day holiday.

But MSCI's index of Asia-Pacific shares outside Japan .MIAPJ0000PUS lost 0.15% as Chinese shares, also resuming trade for the first time since last week, wobbled. The CSI300 .CSI300 fell 1.3%, led by falls in biotech firms.

China's healthcare share index .CSIHC dropped more than 4% after U.S. President Joe Biden threw his support behind waiving intellectual property rights for COVID-19 vaccines. move hit U.S. vaccine makers, too, including Moderna MRNA.O , but Wall Street was supported overall by gains in energy and other cyclical shares.

Dow .DJI hit a record high overnight, having risen 0.29%, while the S&P 500 .SPX added 0.07%.

"This year, both the U.S. and Chinese economy could grow 6% or more. If the world's two biggest economies are growing that much, clearly that's positive," said Norihiro Fujito, chief investment strategist, Mitsubishi UFJ Morgan Stanley (NYSE: MS ) Securities.

Against this backdrop, commodity prices are riding high, with copper CMCU3 flirting with 10-year peaks. MET/L

Oil prices extended gains to edge near their March tops as crude stockpiles in the United States, the world's largest oil consumer, fell more sharply than expected.

U.S. crude futures stood at $65.65 per barrel CLc1 , little changed on the day but just below Wednesday's two-month high of $66.76. O/R

As agricultural products such as corn Cc1 , soybeans Sc1 and wheat Wc1 , have gained sharply in recent weeks, Thomson Reuters CRB index .TRCCRB has risen to its highest level since 2015, having gained more than 21% so far this year.


Higher commodity prices are fuelling inflation expectations in the bond market.

The U.S. breakeven inflation rate, or inflation expectations calculated from the yield gap between inflation-linked bonds US10YTIP=RR and conventional bonds, rose to as high as 2.48% overnight.

But the U.S. nominal bond yields held relatively stable, with the 10-year U.S. Treasuries yield little changed at 1.584% US10YT=RR .

"Bonds were supported partly because the pace of vaccinations has slowed in the States and as real-money investors are starting to buy," said Naokazu Koshimizu, economist at Nomura Securities.

"The rise in inflation is also driven more by supply constraints than demand, which is why we are seeing rising inflation expectations and a fall in nominal yields," he added.

In currencies, the Australian dollar briefly dropped as much as 0.6% after China said it was indefinitely suspending all activity under a China-Australia Strategic Economic Dialogue, the latest setback for their strained relations. last stood down 0.15% at $0.7734 AUD=D4

The British pound was flat at $1.3910 GBP=D4 ahead of a central bank policy review.

The Bank of England could slow the pace of its bond buying to allow its quantitative easing programme to last until the end of the year, as it could reach the cap by September at the current pace of buying. also looked to Scotland's election that could trigger a showdown with British Prime Minister Boris Johnson over a new independence referendum. currencies were little moved, with the focus on Friday's U.S. monthly jobs report which is expected to show that nonfarm payrolls increased by 978,000 jobs last month.

The euro stood flat at $1.2004 EUR= while the yen changed hands at 109.35 per dollar JPY= .

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ World FX rates YTD Global asset performance

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Editing by Himani Sarkar and Kim Coghill)

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