LONDON / HONG KONG (Reuters) – Global stocks rallied on Tuesday as robust Chinese trade data bolstered confidence for a rebound in domestic demand, with market players waiting for US data expected to show a rebound in inflation.
China’s dollar exports are up more than 30% in March from a year earlier, while imports are up 38%, the fastest pace in four years, indicating a recovery in domestic spending after a pandemic.
The broad Euro STOXX 600 gained 0.3% to near record highs, with export-heavy German stocks up 0.2%. Stock indexes of Paris and London fell 0.1%.
Investors were focused on the US inflation data for March, with maturity at 1230 GMT. Markets expect a predicted rise in inflation to accelerate recent movements of equity investors to switch to cyclical stocks.
“The question for the coming months is not whether inflation will pick up, but to what extent will inflation pick up,” said Hugh Gimber, global market strategist at JP Morgan Asset Management.
“We see room for further hikes in government bond yields over the course of 2021. We expect this to drive a continuation of the rotation we’ve seen over the past six months into more cyclical sectors.”
The benchmark’s 10-year US Treasury yield rose 1.6908%, staying below its 14-month high of 1.776% on March 30. Bond yields rise when prices fall.
The MSCI world stock index, which tracks stocks in 49 countries, fell.
The benchmarks for Wall Street futures were flat.
Previously, Asian stocks had been supported by strong Chinese trade data, although MSCI’s widest index of Asia-Pacific stocks outside Japan gave up gains – as did the Chinese blue chip index, CSI300.
“China is benefiting from the rising first, first out” recovery, but the global economy is also accelerating and picking up and that will weaken some of China’s export performance in the coming quarters, “said John Woods, Credit Suisse’s principal investment in Asia -Pacific. officer.
“SIGNIFICANT REBOUND”
In the currency markets, the dollar rose from near a three-week low against other major currencies on Tuesday, supported by a surge in government bond yields.
The dollar has declined along with US interest rates this month after rising to multi-month peaks as markets expect significant fiscal stimulus, coupled with continued monetary easing, to boost US economic growth and higher inflation .
Eric Rosengren, president of Boston Federal Reserve Bank, said on Monday that the US economy could see a significant recovery this year due to looser money and fiscal policies, but the country’s job market was still facing weakness.
He said that with inflation still below the central bank’s 2% target, the current “highly accommodative” monetary policy stance remains appropriate.
Brent crude futures rose 37 cents, or 0.5%, to $ 63.63 a barrel at 0744 GMT. US crude oil futures were up 27 cents, or 0.5%, to $ 59.58 a barrel.
Reporting by Tom Wilson in London and Scott Murdoch in Hong Kong; edited by Stephen Coates, Simon Cameron-Moore, Larry King