Global stocks hit record high after US inflation data

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NEW YORK – A gauge of global stock markets hit record highs on Tuesday, led by the surge in tech-related stocks, as Treasury bill yields eased after consumer price data in states United for March have shown that the pace of inflation is not increasing wildly.

The consumer price index rose 0.6%, the largest increase since August 2012, as the rise in vaccinations and fiscal stimulus triggered 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.

“We’re just going to have a temporary price spike, but there won’t be any structural inflation that’s going to last,” said Carlo Franchini, head of institutional clients at Banca Ifigest SpA in Milan. “The Fed’s comments continue to be conciliatory.”

The dollar fell and gold prices, a traditional hedge against inflation, rebounded from their lowest level in more than a week. Stock markets have taken the data in stride, especially technology-intensive indices whose stocks may be affected by rising costs of debt.

MSCI’s stock performance indicator in 50 countries rose 0.34% to an all-time high, led by gains from Apple Inc, Microsoft Corp and Inc, the top three stocks in the benchmark.


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Apple rose 2.4%, Microsoft 1.0%, and Amazon 0.6%.

On Wall Street, the S&P 500 gained 0.33% as it also set all-time highs intraday 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, raising fears of a recovery setback after six women have developed rare blood clots.

In Europe, the pan-regional STOXX 600 index closed 0.12% higher, with luxury goods and other consumer goods leading the gains, followed by technology stocks.

Asian stocks gained support overnight on Chinese trade data which showed dollar exports rose more than 30% in March from a year earlier, below expectations. Imports jumped 38%, the fastest pace in four years, suggesting a post-pandemic recovery in Chinese spending.

The largest MSCI index of Asia-Pacific stocks outside of Japan gave up most of its gains and closed 0.1% higher. China’s blue chip index fell 0.2%.

T-bill yields are influenced by increased foreign demand, while low bond yields and the cost of debt will support higher risk equity assets, said Steven Oh, global head of credit and income securities fixed at PineBridge Investments.

“The reaction of the Treasury market (to the CPI) has actually been a collective yawn in continuation of the trend that in the short term, market returns are largely unrelated to economic data,” said Oh.


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“Inflation and economics are important in determining yields on Treasuries, but it has been and will be a secondary factor for now.”

Benchmark 10-year bonds fell 5.6 basis points to a return of 1.6198%, well below a 14-month high of 1.776% reached on March 30. The yield curve flattened further after this week’s last auction – $ 24 billion in 30-year bonds – met strong demand, a result Jefferies analysts called “fabulous.”

The dollar rallied briefly on CPI data before reversing and plunging to three-week lows after hitting multi-month highs in March, as markets predicted fiscal stimulus would stimulate a faster economic growth in the United States and higher inflation.

The dollar index fell 0.29%, with the euro up 0.33% to $ 1.1948. The Japanese yen strengthened 0.31% against the greenback to 109.05 per dollar.

Boston Fed Chairman Eric Rosengren said on Monday that the U.S. economy could experience a significant rebound this year due to weak currency and fiscal policy, but the labor market was still weak.

With inflation still below the Fed’s 2% target rate, the current “very accommodative” monetary policy remained appropriate, he said.

Bitcoin hit a record high of $ 63,769, extending its 2021 rally to new highs a day before Coinbase shares were listed in the United States.

US gold futures rose 0.9% to $ 1,747.6 an ounce

Oil prices rose on strong Chinese import data. But the rally was capped by concerns that breaks on the J&J vaccine could delay economic recovery and limit growth in oil demand.

Brent futures rose 39 cents to $ 63.67 a barrel. US crude futures stabilized 48 cents at $ 60.18 a barrel.

(Reporting by Herbert Lash, additional reporting Danilo Masoni in Milan and Tom Wilson in London; Editing by Dan Grebler and Angus MacSwan)


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