TOKYO (Reuters) – Global stock markets rose to a record high on Wednesday as bond yields fell after data showed that US inflation did not pick up massively when the economy reopened.
Most Asia-Pacific stock indices followed Wall Street higher, with Hong Kong’s Hang Seng the main gain in the region, while US Treasury yields fell further in the benchmark, marking a new three-week low.
S&P 500 futures pointed to a further increase of 0.1%.
Japan went against the trend, with the Nikkei falling 0.3% as rising coronavirus cases raised doubts about the economic recovery with 100 days to go before Tokyo hosted the Olympics.
European equities appeared to open modestly higher, with Euro Stoxx futures up 0.3% and UK FTSE futures up 0.1%.
The US consumer price index rose 0.6%, its largest increase since August 2012, as rising vaccinations and fiscal stimulus released pent-up demand. But the data is unlikely to change the view of Federal Reserve Chairman Jerome Powell that higher inflation will be transitory in the coming months.
Powell will speak at the Economic Club of Washington later in the day.
“The market was clearly bracing for higher CPI values,” Westpac strategists wrote in a customer note.
They said Tuesday’s result was “clearly interpreted in the context of the Fed’s commitment to look through ‘temporary’ inflation impulses.”
For bond markets, the question is whether the benchmark yield can break below 1.6% on Wednesday from just 1.611% on Wednesday, they wrote.
“That was an important technical level that, if it breaks, could lead to a rapid increase to 1.5%.”
10-year US Treasury yields had risen from the start of the year to a 14-month high of 1.776% on March 30, betting massive fiscal stimulus measures would accelerate a US recovery, fueling inflation beyond Fed policymakers had expected. to raise interest rates earlier than expected.
But yields have declined this month, partly as the Fed insists that a slack labor market will prevent the economy from overheating.
A wave of strong auction results, including Tuesday’s 30-year bonds, also helped tame the yields. [US/]
MSCI’s widest index of Asia-Pacific stocks outside Japan rose 0.8%. Hong Kong’s Hang Seng rose 1.4%, while the Chinese blue chip index rose 0.5%.
MSCI’s measure of equity performance in 50 countries rose 0.2%, once again hitting all-time high.
Again, the markets look positive, and despite higher than expected inflation, it is being interpreted as a sign of better growth, said Michael McCarthy, chief market strategist at CMC Markets.
“We’ve seen support for those high-growth technology stocks and other sectors exposed to economic growth, including financial services.”
The fall in bond yields drove up US technology stocks overnight, including Apple Inc, Microsoft Corp and Amazon.com Inc, the three largest positions in the global benchmark.
The S&P 500 gained 0.33% as it also posted intra-day and record close highs, while the Nasdaq Composite added 1.05%. The Dow Jones Industrial Average fell 0.2%.
Johnson & Johnson’s share fell 1.34% after US federal health authorities recommended pausing the rollout of the COVID-19 vaccine for at least a few days after six women developed rare blood clots. The setbacks in vaccine rollout have raised concerns about the global economic recovery.
Earnings will take center stage on Wednesday, with JPMorgan Chase & Co. and Goldman Sachs Group Inc among the companies report.
The US dollar fell along with government bond yields to a three-week low for large peer companies. [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 hit a record over $ 64,500 and expanded its rally to new highs in 2021 the day Coinbase stock will be listed in the United States.
In the oil markets, Brent crude oil futures rose 47 cents to $ 64.14 a barrel. US crude oil 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