LONDON (Reuters) – Global markets remained focused on rising inflation on Thursday as banks and tech rebooted global stocks, oil and gas prices rose again, but the dollar and yields benchmark government bonds both stagnated.
The record inflation data exiting Chinese factories overnight, before figures from U.S. producers later, meant the theme of price pressure was alive and well, but the reaction from traders seemed more nuanced.
The dollar, pushed to its highest level for over a year this week amid rising bets on a 2022 U.S. interest rate hike, eased for the second day in a row with the U.S. Treasury yield at 10 years, which tends to stimulate global borrowing. costs.
The European STOXX 600 index also hit its highest level of the month, as investors put aside recent caution. Wall Street futures were also up 0.5% as analysts digested a storm of profits from the big banks of Bank of America, Citigroup and Morgan Stanley. [.EU][.N]
“Our view is that central banks will look at the inflationary effects of energy prices,” said Kiran Ganesh, head of multi-assets at UBS Global Wealth Management.
“The individual governors (of the central bank) seem a little more cautious, but we are not going to see any substantial rate hikes,” Ganesh added, predicting that he would not end up turning into stagflation either – high inflation and stagnant growth – neither.
Mega-cap growth names including Facebook, Microsoft, Amazon, Apple and Google all rose about 1% in pre-open bell maneuvers, as their recent rebound is expected to continue. [.N]
The main MSCI Asian equity index also gained 0.6% in its fifth rise in six overnight sessions. The Japanese Nikkei climbed 1.4%, although shares of Chinese real estate companies suffered more losses in Shanghai as the Evergrande crisis in China continued to boom. [.T]
The currency and commodity markets were sending mixed signals. Gold, often seen as a hedge against rising inflation, stabilized after its best session in seven months on Wednesday.
Oil bulls pushed Brent crude towards $ 85 a barrel. [O/R] Natural gas climbed 2%, having already climbed more than 150% this year, causing global energy prices to soar. Bitcoin, also sometimes touted as an inflation hedge, peaked at $ 58,550 in five months.
The dollar, meanwhile, retreated to a nine-day low, allowing the euro, pound sterling, Australian and New Zealand dollars to rise.
Expectations that the US Federal Reserve will tighten US monetary policy faster than previously thought saw the greenback hit a year-high on Tuesday, but is now down for October.
“There is a bit of a rebound for the euro, a bit more rebound for the pound and the biggest rebound is the Kiwi dollar, so it’s a beta rally of the G10 FX,” Societe Generale’s Kit Juckes said. , although he also reported the latest record for the Turkish lira after the country’s president ousted another group of central bankers.
The first jobless claims and data on US producer price inflation are also expected shortly, which will further fuel the debate over inflation and the Fed’s rate hike.
“It seems like a classic case of the buy, rumor, sell mentality,” Neil Jones, FX sales manager at Mizuho, said of the falling dollar. “The Fed has confirmed the expectations of many investors, I would say, holding long positions in the dollar.”
Additional reporting by Sujata Rao and Elizabeth Howcroft in London; Editing by Raissa Kasolowsky and Mark Potter