TOKYO (Reuters) – Global stock markets hit a record high on Wednesday as bond yields eased after data showed inflation in the United States was not rising wildly as the economy reopened .
Most Asia-Pacific stock indexes followed Wall Street higher, with Hong Kong’s Hang Seng leading gains in the region, while benchmark U.S. Treasury yields continued to decline, marking a new three week low.
Futures contracts on S&P 500 showed a further rise of 0.1%.
Japan turned the tide, with the Nikkei falling 0.3% as rising coronavirus cases raised doubts about its economic recovery 100 days before Tokyo is supposed to host the Olympics.
European stocks looked set to open slightly higher, Euro Stoxx futures up 0.3% and UK FTSE futures up 0.1%.
The consumer price index in the United States rose 0.6%, the largest increase since August 2012, as rising vaccinations and fiscal stimulus spurred pent-up demand. But the data is unlikely to change Federal Reserve Chairman Jerome Powell’s view that higher inflation in the coming months will be transient.
Powell is scheduled to speak later today at the Economic Club in Washington.
“The market was clearly preparing for higher CPI readings,” Westpac strategists wrote in a client note.
They said Tuesday’s result was “clearly interpreted in the context of the Fed’s commitment to look at ‘transient’ inflation impulses.”
For bond markets, the question is whether the benchmark yield can drop below 1.6% from 1.611% on Wednesday, they wrote.
“This is an important technical level which, if broken, could quickly drop to 1.5%.”
The 10-year US Treasury yield had jumped year-to-date to a 14-month high of 1.776% on March 30 on bets that a massive fiscal stimulus would accelerate a US recovery, fueling faster than inflation. Fed policymakers are not anticipating it and pushing it. to raise interest rates sooner than expected.
But yields eased this month, in part due to the Fed’s insistence that the slowing labor market will keep the economy from overheating.
A wave of strong auction results, including 30-year bonds on Tuesday, also helped tame yields. [US/]
The largest MSCI index of Asia-Pacific stocks outside of Japan rose 0.8%. Hong Kong’s Hang Seng jumped 1.4%, while China’s blue chip index gained 0.5%.
MSCI’s stock performance indicator in 50 countries rose 0.2%, renewing its all-time high.
“Once again, the markets are looking on the bright side, and despite this higher-than-expected inflation reading, this has been interpreted as a sign of better growth,” said Michael McCarthy, chief market strategist at CMC Markets.
“We have seen support for these high growth tech stocks and other sectors exposed to economic growth, including financial services.”
Falling bond yields lifted US tech stocks overnight, including Apple Inc, Microsoft Corp and Amazon.com Inc, the top three holdings in the global benchmark.
The S&P 500 gained 0.33% as it also set all-time highs intra-day and close, while the Nasdaq Composite added 1.05%. The Dow Jones Industrial Average fell 0.2%.
Johnson & Johnson shares slipped 1.34% after U.S. federal health agencies recommended suspending rollout of its COVID-19 vaccine for at least a few days, after six women developed rare blood clots. Setbacks in immunization rollout have raised concerns about the global economic recovery.
Profits will be the focus on Wednesday, with JPMorgan Chase & Co. and Goldman Sachs Group Inc among the companies reporting.
The US dollar eased with yields on Treasuries, slipping to a three-week low among major peers. [FRX/]
Gold, a traditional hedge against inflation, extended its rise from a low in more than a week to trade around $ 1,742 in the spot market.
Bitcoin hit a record high above $ 64,500, extending its 2021 rally to new highs on the day Coinbase shares are to be listed in the United States.
In the oil markets, Brent futures rose 47 cents to $ 64.14 a barrel. US crude futures added 47 cents to $ 60.65.
Reporting by Kevin Buckland; Additional reporting by Herbert Lash; Editing by Ana Nicolaci da Costa and Kim Coghill