On Friday, stock markets were on course for a seventh consecutive day and fourth consecutive month of gains, as investors anticipated the US will lead the world economy out from its COVID-19 downturn with a $6 trillion spending spree.

European equities began at a new record high in London, Frankfurt, and Paris. Tokyo had risen more than 2% overnight, and the 50-country MSCI global index was now over 90% higher than its COVID lows.

Following speculations that President Joe Biden will seek $6 trillion in federal expenditures for the fiscal year 2022 in budget proposals later this year, US markets were primed for more rises.

As per a Reuters survey of about 300 experts conducted this week, most believe global equities will continue to advance this year due to healthy economic and profit recoveries, though any significant acceleration in inflation would dampen the excitement.

“We will have what we term ‘overheat,'” said Trevor Greetham, head of multi-asset at Royal London Asset Management, forecasting a “short and fiery” boom in many of the world's largest countries, which may create surges in inflation and leave central banks rushing to respond.

Substantial changes occurred in the currency, commodity, and cryptocurrency sectors.

The dollar reached a seven-week high versus the yen as traders prepared for what is likely to be hot U.S. inflation numbers later in the day, while the Chinese yuan stretched its hottest monthly stretch since November. The pound fell somewhat on speculation that the UK would postpone the full removal of COVID restrictions next month. However, it was still on track for its best month versus the dollar this year but was close to a three-month high at $1.4156.

Cryptoassets and volatile developing market currencies are two market categories wherein “sell in May” would also be sound advice this year.

Turkey's currency fell to a new low ahead of a review of its already-junk credit rating, whereas Bitcoin fell 8%, bringing its May losses to over 40%, owing to a clampdown in China and environmental worries.

Oil prices, which provide a big influence on inflation via energy expenses, were creeping closer to $70.

Analysts predict global oil demand to return closer to 100 million barrels per day in the third quarter, due to summer traveling in Europe and the United States following COVID-19 immunization programs. Brent and WTI are on course to post weekly increases of 5% to 6%.

Lately, solid economic news from the United States, the world's largest economy and oil user, has boosted risk tolerance. The number of Americans submitting new applications for unemployment benefits dropped to the lowest since mid-March 2020, according to statistics released on Thursday, exceeding expectations.

A secondary analysis affirmed a 6.4 % increase in the annualized pace of economic growth in the fourth quarter, aided by huge fiscal stimulus.

Positive economic data helped push benchmark Treasury rates back above 1.6% overnight. In early trade, those on Germany's Bunds, widely regarded as the European benchmark, rose with a still negative -0.17 %.

Bond markets have been watching this week because various Federal Reserve officials came out to reassure investors about mounting evidence of price pressures, while also indicating a likely start to discussions about withdrawing stimulus.

Randal Quarles, the Fed's vice chair for supervision, stated on Thursday that he is "totally committed" to maintaining monetary policy at full speed as jobs rebound while arguing that "upside" risks to inflation are growing.

In an interview with Reuters released on Friday, one of the ECB's officials, Isabel Schnabel, stated that although the Eurozone economy had fortunately passed its low point, it still need assistance.

“Rising rates are a normal occurrence at a turning point in the economy – investors are becoming more hopeful, inflation expectations rise, and nominal rates rise as a result,” Schnabel explained. “This is exactly what we might anticipate and would like to see.”

European equities soared to a new high on Friday, with British-exposed bank sectors benefiting from a hawkish statement from a Bank of England official, and the likelihood of more US fiscal expenditure bolstering market mood.

The pan-European STOXX 600 index surged 0.6% to a record high of 448.98 points this week, adding 1%.

The Europe-only STOXX index and the European blue-chip index both rose approximately 0.7 %, selling slightly below multi-year highs.

Bank stocks increased 0.4 % to a 15-month high, mirroring an increase in eurozone bond rates. British bankers, particularly HSBC, leading the increases after a Bank of England policymaker indicated a rate rise sooner than scheduled.

Gains in British-exposed equities aided the insurance and financial services sectors, which have been the day's strongest performers.

Optimism about economic development has boosted European equities this year, with numerous nations relaxing COVID-19 restrictions against the background of a consistent immunization campaign.

The reopening initiatives have benefited travel and leisure equities, which have outperformed their regional rivals this week with a 4% increase.