Global equities hit a record as bond yields fell

TOKYO (Reuters) – Global stock markets rose to a record high on Wednesday as bond yields softened after data showed US inflation was not rising sharply as the economy reopens.

Most Asian and Pacific stock indexes continued to rise on Wall Street, with Hong Kong’s Hang Seng gains in the region, while U.S. Treasury benchmark yields continued its decline, marking a new three-week low.

Futures S&P 500 pointed to a further rise of 0.1%.

Japan slowed the trend, with the Nikkei falling 0.3%, as coronavirus cases raised doubts about its economic recovery with 100 days to go before Tokyo plans to host the Olympics.

European equities appeared to open slightly higher, with Euro Stoxx futures 0.3% and British FTSE futures 0.1% higher.

The U.S. consumer price index rose 0.6%, the largest increase since August 2012, as increased vaccinations and fiscal stimulus triggered cumulative demand. But the data is unlikely to change Federal Reserve Chairman Jerome Powell’s view that higher inflation in the coming months will be temporary.

Powell is scheduled to speak later in the day at the Washington Economic Club.

“The market was clearly prepared to get higher CPI readings,” 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 at ‘transient’ inflationary impulses.”

For bond markets, the question is whether benchmark yields may break below 1.6% from 1.611% on Wednesday, they wrote.

“This has been an important technical level, which, if broken, could quickly rise to 1.5%.”

The ten-year U.S. Treasury yield had risen from the start of the year to a 14-month high of 1.766% on March 30, in bets that a massive fiscal stimulus would accelerate the U.S. recovery, causing faster-than-expected inflation by Fed policymakers and causing it to raise interest rates earlier than expected.

But yields have fallen this month, in part because of the Fed’s insistence that the slowdown in the labor market will prevent the economy from heating up.

A period of strong auction results, including 30-year bonds on Tuesday, has also helped tame yields. [US/]

MSCI’s broader Asia-Pacific stock index outside of Japan rose 0.8%. Hong Kong’s Hang Seng jumped 1.4%, while China’s blue chip index gained 0.5%.

The measurement of MSCI equity performance in 50 countries advanced 0.2%, renewing its all-time high.

“Once again, markets are looking on the bright side and, despite reading higher-than-expected inflation, it has been interpreted as a sign of better growth,” said Michael McCarthy, chief market strategist at CMC Markets.

“We have seen support for high-growth technology stocks and other sectors exposed to economic growth, including financial.”

The fall in bond yields lifted U.S. technology stocks overnight, including Apple Inc., Microsoft Corp. and Amazon.com Inc., the world’s top three holdings.

The S&P 500 gained 0.33% as it also set daytime highs and a record high, while the Nasdaq Composite added 1.05%. The Dow Jones industrial average fell 0.2%.

Shares of Johnson & Johnson fell 1.34% after U.S. federal health agencies recommended stopping the deployment of the COVID-19 vaccine for at least a few days after six women had rare blood clots. The setbacks in vaccination facilities have raised concerns about the global economic recovery.

Earnings will be concentrated on Wednesday, with JPMorgan Chase & Co. and Goldman Sachs Group Inc. among the companies that will report.

The US dollar relaxed along with Treasury yields, falling to a three-week low for major pairs. [FRX/]

Gold, a traditional hedge against inflation, widened its rise from the lowest in more than a week to trading around $ 1,742 in the spot market.

Bitcoin hit a record high of $ 64,500, expanding its 2021 concentration to new heights on the day Coinbase shares should be listed in the United States.

In the oil markets, Brent crude oil futures rose 47 cents to $ 64.14 a barrel. U.S. crude futures added 47 cents to $ 60.65.