* Asian stocks are recovering from multi-week highs, valuations are exhilarating
* The US dollar decline continues
* Euro remains strong
* US unemployment report in sight
By Swati Pandey
SYDNEY, June 5 (Reuters). Asian equities were at their biggest weekly rise in over eight years, while the euro was hovering near a 1/2 month high as the European Central Bank surprised with more momentum and raised hopes for a global recovery.
The stock rally prompted investors to make profits ahead of Friday’s non-agricultural salary data, which is expected to further worsen the US job market.
As a result, the broadest MSCI Asia Pacific stocks outside of Japan fell 0.2% from a 12-week high, while China̵
The MSCI Ex Japan Index has risen 6.5% so far this week. If earnings continue, this would be the best weekly chart since late 2011.
Emerging market stocks also posted solid gains this week, with the Philippines playing the leading role. They rose about 1,000 points, or 11.6%, a sign that money was flowing into higher-risk assets.
“This market has grown so much that many people say,” I’m going to take some profit, “said Jim Paulson, chief investment strategist at The Leuthold Group in Minneapolis.
The Australian benchmark fell 0.3%, but was still at its highest since mid-March, while the Japanese Nikkei fell 0.36%.
The E-Mini futures for the S & P 500 rose 0.15%.
The S&P 500 fell 0.34% overnight and the Nasdaq Composite lost 0.69%. The Dow defied the trend and ended up a shadow higher.
According to Matthew Sherwood, investment strategist at Perpetual, investors were somewhat cautious at these heady levels and had the highest valuations since the dot.com boom in 2000.
Technical chart indicators indicate that the market is at an “overbought” level, Sherwood added, a signal that a correction is due.
Global equity markets were depressed in March when they encountered “bear territory” due to fears that the lockdowns caused by COVID-19 could drive the global economy into a long and deep recession.
Since then, market sentiment has been supported by strong stimulus from the central bank.
“Central banks have rightly intervened to cushion the economic blow of COVID-19 and there is no doubt that the ship has been stabilized,” said Bob Michele, chief investment officer and head of the global fixed income, currencies and commodities group JPMorgan Asset Management.
However, Michele warned that the massive scale of quantitative easing would distort pricing and dampen the traditional signals of the bond markets for growth and inflation, and advocated a “co-investment” alongside central banks.
Investor attention is now focused on Friday’s US employment report, which shows that the number of non-agricultural workers fell 8 million in May after a record 20.54 million in April.
The US unemployment rate is expected to rise from 14.7% in April to 19.8%, a record after World War II.
The currency markets show continued confidence in the expected revival of the global economy.
The euro was last at $ 1.1329 after hitting a 12-week high of $ 1.1361 on Thursday after the European Central Bank (ECB) increased its bond purchases by more than expected $ 600 billion.
The single currency rose 2% this week, on its way to the third weekly gain in a row.
Next, all eyes will be on the US Federal Reserve, which will hold its regular two-day session next week.
The dollar was recently unchanged at 109.09 against the Japanese yen after having risen 1.2% this week.
The dollar index, which measures the greenback against a basket of major currencies, is facing its third weekly loss in a row.
The risk-sensitive Australian dollar was close to a five-month high at $ 0.6941 and was on its way to its third consecutive weekly rise.
Commodities fell 28 cents to $ 37.13 a barrel and Brent fell 20 cents to $ 39.79.
Spot gold was unchanged at $ 1,711 an ounce.
Reporting by Swati Pandey in Sydney and David Henry in New
York; Edited by Sam Holmes