TOKYO (Reuters) World stock markets rose to a record high on Wednesday as bond yields weakened after data showed US inflation was not rising wildly as the economy reopened.
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.
S&P 500 futures contracts indicate a further increase of 0.1%.
Japan countered the trend, while the Nikkei fell 0.3% as increasing cases of coronavirus raised doubts about its economic recovery, with another 100 days before Tokyo would host the Olympics.
European equities appear to be particularly high, with Euro Stoxx futures up 0.3% and Britain’s FTSE futures up 0.1%.
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%.”
Ten-year U.S. Treasury yields rose from the beginning of the year to a 14-month high of 1.776% on March 30 on bets that massive fiscal stimulus would accelerate a U.S. recovery, yielding faster-than-expected inflation the Fed policymakers expected and encouraged it. to raise interest rates sooner than expected.
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 broadest index of Asia-Pacific stocks outside Japan rose 0.8%. Hong Kong’s Hang Seng jumped 1.4%, while China’s blue disc index rose 0.5%.
MSCI’s benchmark for performance in 50 countries rose 0.2%, renewing the all-time high.
“Once again, markets are on the bright side, and despite higher-than-expected inflation, this has been interpreted as a sign of better growth,” said Michael McCarthy, chief market strategist at CMC Markets.
“We have seen support for the growing technology stocks and other sectors exposed to economic growth, including financial.”
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 $ 1,742 in the spot market.
Bitcoin reached a record high of more than $ 64,500, which extended the rally of 2021 to new heights on the day Coinbase would list shares in the United States.
In the oil markets, Brent crude futures rose 47 cents to $ 64.14 a barrel. U.S. crude futures added 47 cents to $ 60.65.
Reporting by Kevin Buckland; Additional reporting by Herbert Lash; Edited by Ana Nicolaci da Costa and Kim Coghill