TOKYO (Reuters) – Global stock markets rose to a new high on Wednesday as yields fell after data showed US inflation was not rising wildly.
Most Asian and Pacific stock indices followed Wall Street higher, with Hang Seng leading Hong Kong in the region, while U.S. Treasury yields continued their decline, which was a fresh three-week low.
Japan countered the trend, while the Nikkei fell 0.4% as increasing cases of coronavirus raised doubts about the reopening of the economy with another 100 days before Tokyo would host the Olympics.
The US consumer price index rose 0.6%, the biggest increase since August 2012, as increasing vaccinations and fiscal stimulus triggered pent-up demand. But the data is unlikely to change the view of Federal Reserve Jerome Powell that higher inflation will be short-lived in the coming months.
Powell will speak at the Economic Club in Washington later that day.
“The market has clearly risen for higher CPI readings,” Westpac strategists wrote in a customer letter.
They said the result on Tuesday “is clearly interpreted in the context of the Fed’s commitment to examine ‘transient’ inflationary impulses.”
For bond markets, the question is whether the benchmark yield could break below 1.6% from as low as 1.611% on Wednesday, they write.
“It was an important technical level, which, if broken, could move quickly to 1.5%.”
The ten-year US Treasury yield rose from the beginning of the year to a 14-month high of 1.776% on March 30 on the bet that massive fiscal stimulus would accelerate a US recovery, yielding faster inflation than what the Fed policymakers expect.
But yields eased this month, in part because of the Fed’s insistence that the economy not overheat.
A spate of strong auction results, including Tuesday 30-year bonds, also helped tame the returns. [US/]
MSCI’s largest Asia-Pacific stock index outside Japan rose 0.6%. Hong Kong’s Hang Seng rose 1.3%, while China’s blue chip index rose 0.7%.
MSCI’s stock performance benchmark in 50 countries rose 0.15%, extending its all-time high.
The decline in bond yields has boosted U.S. tech stocks overnight, including Apple Inc., Microsoft Corp. and Amazon.com Inc., the top three holders of the global benchmark.
The S&P 500 rose 0.33% as it also reached intra-day and record highs, while the Nasdaq Composite added 1.05%. The Dow Jones industrial average fell 0.2%.
Johnson & Johnson shares fell 1.34% after U.S. federal health agencies recommended suspending the COVID-19 vaccine for at least a few days, after six women had rare blood clots. Vaccine setbacks have raised concerns about the global economic recovery.
Earnings will be focused on Wednesday, while JPMorgan Chase & Co. and Goldman Sachs Group Inc. among the companies reporting.
The US dollar declined along with Treasury yields, to a three-week low to large peers. [FRX/]
Gold, a traditional inflation hedge, extended its rise from its lowest in more than a week to about $ 1,745 in the spot market.
Bitcoin reached a record high of more than $ 63,860, expanding its rally to new heights in 2021 on the day Coinbase shares were listed in the United States.
In the oil markets, Brent crude futures rose 40 cents to $ 64.07 a barrel. U.S. crude futures added 37 cents to $ 60.55 a barrel.
Edited by Ana Nicolaci da Costa