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GLOBAL MARKETS-World stocks hit record high as bond yields ease

Published 14/04/2021, 03:55 pm
© Reuters.
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* Chinese stocks lead gains in Asian equities

* Bond yield retreat boosts tech shares

* Bitcoin hits record high, dollar weakens

By Kevin Buckland

TOKYO, April 14 (Reuters) - Global stock markets rose to a record high on Wednesday as bond yields eased after data showed U.S. inflation was not rising wildly as the economy reopens.

Most Asia-Pacific share indexes followed Wall Street higher, with Hong Kong's Hang Seng leading gains in the region, while benchmark U.S. Treasury yields continued their decline, marking a fresh three-week low.

S&P 500 futures ESc1 pointed to a further 0.1% rise.

Japan bucked the trend, with the Nikkei .N225 falling 0.3% as rising coronavirus cases raised doubts about its economic recovery with 100 days to go until Tokyo is scheduled to host the Olympics.

European stocks looked set to open modestly higher, with Euro Stoxx futures STXEc1 up 0.3% and Britain's FTSE futures FFIc1 0.1% higher.

The U.S. consumer price index rose 0.6%, the biggest increase since August 2012, as rising vaccinations and fiscal stimulus unleashed pent-up demand. But the data is unlikely to change Federal Reserve Chair Jerome Powell's view that higher inflation in coming months will be transitory. is scheduled to speak later in the day at the Economic Club of Washington.

"The market clearly braced for higher CPI readings," Westpac strategists wrote in a client note.

They said Tuesday's result was "clearly being interpreted within the context of the Fed's commitment to look through 'transitory' inflation impulses."

For bond markets, the question is whether the benchmark yield can break below 1.6% from as low as 1.611% on Wednesday, they wrote.

"That has been an important technical level, which if broken could see a quick move to 1.5%."

The 10-year U.S. Treasury yield US10YT=RR had surged from the start of the year to a 14-month high of 1.776% on March 30 on bets that massive fiscal stimulus would speed up a U.S. recovery, stoking faster inflation than Fed policymakers anticipate and prompting it to raise interest rates sooner than expected.

But yields have eased this month, in part owing to the Fed's insistence that labour market slack will prevent the economy from overheating.

A spate of strong auction results, including of 30-year bonds US30YT=RR on Tuesday, has also helped to tame yields. US/

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rallied 0.8%. Hong Kong's Hang Seng .HSI jumped 1.4%, while China's blue-chip index .CSI300 gained 0.5%.

MSCI's gauge of equity performance in 50 countries .MIWD00000PUS advanced 0.2%, renewing its all-time peak.

"Once again, markets are looking on the bright side, and despite that higher-than-expected inflation read, it's been interpreted as a sign of better growth," said Michael McCarthy, chief markets strategist at CMC Markets.

"We've seen support for those high-growth tech stocks, and other sectors exposed to economic growth, including financials."

The decline in bond yields lifted U.S. tech stocks overnight, including Apple Inc AAPL.O , Microsoft Corp MSFT.O and Amazon.com Inc AMZN.O , the top three holdings of the global benchmark.

The S&P 500 .SPX gained 0.33% as it also set intra-day and record closing highs, while the Nasdaq Composite .IXIC added 1.05%. The Dow Jones Industrial Average .DJI fell 0.2%.

Johnson & Johnson (NYSE:JNJ)'s shares JNJ.N slid 1.34% after U.S. federal health agencies recommended pausing the rollout of its COVID-19 vaccine for at least a few days, after six women developed rare blood clots. Setbacks to vaccination rollouts have raised concerns about the global economic recovery.

Earnings will be a focus on Wednesday, with JPMorgan Chase & Co (NYSE:JPM). JPM.N and Goldman Sachs Group Inc (NYSE:GS) GS.N among the companies reporting.

The U.S. dollar =USD eased along with Treasury yields, slipping to a three-week low to major peers. FRX/

Gold XAU= , a traditional inflation hedge, extended its rise from the lowest in more than a week to trade around $1,742 in the spot market.

Bitcoin BTC=BTSP hit a record above $64,500, extending its 2021 rally to new heights on the day Coinbase shares are due to list in the United States. oil markets, Brent crude futures LCOc1 rose 47 cents to $64.14 a barrel. U.S. crude futures CLc1 added 47 cents to$60.65.

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