TOKYO (Reuters) – Global equity markets rose to a record high on Wednesday as bond yields softened after data showed US inflation was not rising sharply.
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.
Japan slowed the trend, with the Nikkei falling 0.4%, as the rise in coronavirus cases raised doubts about the economic reopening with 100 days to go before Tokyo plans to host the Olympics.
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 inflation than expected by Fed policymakers.
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 Japan rose 0.6%. Hong Kong’s Hang Seng rose 1.3%, while China’s blue chip index jumped 0.7%.
The measurement of MSCI equity performance in 50 countries advanced 0.15%, expanding its all-time high.
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 trade around $ 1,745 in the spot market.
Bitcoin hit a record above $ 63,860, 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 40 cents to $ 64.07 a barrel. U.S. crude futures added 37 cents to $ 60.55 a barrel.
Edition by Ana Nicolaci da Costa