Dollar hits 16-month high, stocks rebound after inflation scare

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NEW YORK/LONDON (Businesshala) – The dollar rose on Thursday, hitting a 16-month high a day after the strongest US inflation reading in more than three decades, while equities to corporate growth on expectations of higher consumer prices Will help.

FILE PHOTO: A US dollar banknote is seen in front of the displayed stock graph in this example taken on May 7, 2021. Businesshala/Dado Ruvik/Illustration

The UK’s blue-chip stock index rose to a 20-month high as China-exposed miners listed in London jumped on relief that property developer China Evergrande averted a default.

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European stocks rose after Goldman Sachs said regional earnings chains were resilient to supply snags, a message that echoed on Wall Street as investors view the impact on rising prices as temporary but positive for corporate profits.

“Inflation is not always a bad thing for the equity market,” said Don Townswick, director of equity strategies at institutional asset manager Conning. “Tightening usually happens when the economy is doing really well, so the prospect of just a few higher interest rates isn’t a problem.”

The dollar index, which gauges the currency against six peers including the yen and the euro, rose further on Wednesday after posting its biggest daily jump since March following a higher-than-expected rise in US consumer price data. [/FRX]

The CPI index posted its biggest monthly gain in four months to push the annual increase in inflation to 6.2%, the strongest year-over-year advance since November 1990.

The dollar pushed the euro below $1.15, causing it to drop to the next major chart support level at $1.12. European equities rose on the prospect of competitive growth, but the Japanese yen fell to a four-year low of 114.15 per dollar.

MSCI’s all-country world index advanced 0.15% and the broader STOXX Europe 600 index rose 0.32% to end a record high.

On Wall Street, the Dow Jones Industrial Average ended 0.35%, the S&P 500 up 0.21% and the Nasdaq Composite up 0.77%.

(Graphic: US ‘real’ yields are now lower than emerging markets 🙂

Chinese and Japanese stocks also rose. China’s markets were backed by asset giant Evergrande to avoid default again and Beijing is expected to extend support to the broader sector. The Nikkei was supported by a weaker yen, which helped exporters. [.T][.SS]

Chinese blue chips rose 1.6%. Evergrande jumped about 7%. Japan’s Nikkei closed up 0.6%, while the yen weakened to 114.15 per dollar from a strong level of 112.73 earlier this week.

Tesla slipped 0.2% in one day after heavy losses earlier this week after regulatory filings showed founder and chief executive Elon Musk posted nearly $5 billion in sales over the past few days. Had it. Tesla is down 13% for the week.

Walt Disney fell nearly 7.6% to lead the decline among Dow constituents, as it reported the smallest increase in Disney+ subscriptions since the service’s launch and posted downbeat profits at its theme parks. [.N]

Gold prices hit a five-month high in the previous session as investors sought a hedge against inflation. On Thursday, gold touched a five-month high of $1,868.20 overnight before turning slightly lower.

US gold futures for delivery in December were up 0.8% at $1,863.90 an ounce.

Oil climbed above $83 a barrel before the Organization of the Petroleum Exporting Countries cut its 2021 oil demand forecast due to higher prices on a firmer dollar in the market and concerns about bullish US inflation.

Brent crude was up 23 cents at $82.87 a barrel. US crude rose 25 cents to $81.59 a barrel.

Bitcoin hit a new all-time high at $69,000 before trading up about 0.19% at $65,046.30.

The US Treasury market was closed in celebration of Veterans Day, or Armistice Day elsewhere.

Reporting by Herbert Lash, Additional reporting by Mark Jones in London, Editing by Kevin Buckland, David Gregorio and Lisa Shumaker in Tokyo

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