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Global stocks hit record after U.S. inflation data

Published 14/04/2021, 07:01 am
© Reuters.
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(Adds close of U.S. markets)

* Market 'yawns' at jump in consumer price index

* Treasury yields ease, lifting tech stocks

* Bitcoin sets record high

* China imports rise at fastest pace in 4 years

* Graphic: Global asset performance http://tmsnrt.rs/2yaDPgn

* Graphic: World FX rates http://tmsnrt.rs/2egbfVh

By Herbert Lash

NEW YORK, April 13 (Reuters) - A gauge of global equity markets rose to record highs on Tuesday, led by surging technology-related stocks, as Treasury bond yields eased after U.S. consumer price data for March showed the pace of inflation was not rising wildly.

The 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. just going to have a temporary flame-up in prices but there will not be any structural inflation that's here to stay," said Carlo Franchini, head of institutional clients at Banca Ifigest SpA in Milan. "Fed comments continue to be conciliatory."

The dollar fell and gold prices, a traditional inflation hedge, rebounded from their lowest in more than a week. Equity markets took the data in stride, especially technology-heavy indexes whose stocks can be affected by rising debt costs.

MSCI's gauge of equity performance in 50 countries .MIWD00000PUS advanced 0.34% to an all-time peak, led by gains in Apple Inc AAPL.O , Microsoft Corp MSFT.O and Amazon.com Inc AMZN.O , the top three holdings of the benchmark index.

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

On Wall Street, 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, raising fears of the recovery's setback after six women developed rare blood clots.

In Europe, the pan-regional STOXX 600 index .STOXX closed up 0.12%, with luxury .SXQP and other consumer stocks .SXRP leading gains, followed by technology stocks .SX8P .

Asian stocks overnight gained support on China trade data that showed exports in dollar terms rose more that 30% in March from a year earlier, short of expectations. Imports jumped 38%, the fastest pace in four years, suggesting a post-pandemic recovery in Chinese spending. broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS gave up most of its gains and closed up 0.1%. China's blue-chip index .CSI300 fell 0.2%.

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

"The Treasury market reaction (to CPI) was effectively a collective yawn in continuing the trend that in the near term, market yields are largely unrelated to economic data," Oh said.

"Inflation and economic data matters in determining Treasury yields, but it's been and will be a secondary factor for now."

Benchmark 10-year notes US10YT=RR fell 5.6 basis points to yield 1.6198%, well below a 14-month high of 1.776% hit March 30. The yield curve flattened further after the last of this week's auctions - $24 billion of 30-year bonds - was met with solid demand, a result analysts at Jefferies called "fabulous."

The dollar briefly spiked on the CPI data before reversing course and dipping to three-week lows after surging to multi-month peaks in March as markets anticipated fiscal stimulus would spur faster U.S. economic growth and higher inflation.

The dollar index =USD fell 0.29%, with the euro EUR= up 0.33% to $1.1948. The Japanese yen strengthened 0.31% versus the greenback at 109.05 per dollar.

Boston Fed President Eric Rosengren said on Monday the U.S. economy could see a significant rebound this year due to looser money and fiscal policy but the job market still faced weakness.

With inflation still below the Fed's 2% target rate, the current "highly accommodative" monetary policy remained appropriate, he said. BTC=BTSP hit a record of $63,769, extending its 2021 rally to new heights a day before the listing of Coinbase shares in the United States. gold futures GCv1 settled up 0.9% at $1,747.6 an ounce

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

Brent crude futures LCOc1 rose 39 cents to settle at $63.67 a barrel. U.S. crude futures CLc1 settled up 48 cents at $60.18 a barrel.

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http://tmsnrt.rs/2egbfVh Global asset performance

http://tmsnrt.rs/2yaDPgn

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