Inflation angst lifts stocks but reins back dollar

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LONDON (Businesshala) – World markets remained focused on rising inflation on Thursday as tech stocks rebounded in global equities, oil and gas prices rose again, but both the dollar and benchmark government bond yields stalled.

FILE PHOTO: People are seen on Wall Street outside the New York Stock Exchange (NYSE) in New York City, US, March 19, 2021. REUTERS/Brendan McDermid

Stronger-than-expected US CPI data on Wednesday followed overnight record high Chinese factory gate inflation data meant the price pressure topic was very lively but traders’ reaction looked more subtle.

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The dollar, which has moved to a more than 1-year high this week on bets on a 2022 US interest rate hike, eased for the second day in a row with the 10-year US Treasury yield, which tends to drive global gains. borrowing cost.

Europe’s STOXX 600 index also climbed to its highest point of the month as investors there recently cautioned. Wall Street futures later added 0.5% ahead of higher inflation data and bigger bank earnings. [.EU][.N]

“We believe central banks are going to see the inflationary impact of energy prices,” said Kiran Ganesh, Head of Multi-Asset at UBS Global Wealth Management.

“Individual (central bank) governors are looking a bit more cautious, but we are not seeing substantial rate hikes,” Ganesh said, predicting that this impasse – high inflation and stagnant growth – won’t end either.

MSCI’s main index of Asian shares had gained 0.6% in its fifth rise in six sessions overnight. Japan’s Nikkei climbed 1.4%, although shares of the Chinese property company suffered more losses in Shanghai as the Evergrande crisis continued to escalate. [.T]

FX and commodity markets were giving mixed signals. Gold, often seen as a hedge against rising inflation, held steady on Wednesday after enjoying its best session in seven months.

Oil bulls pushed Brent crude back to $85 a barrel. [O/R] Natural gas climbed 2%, bucking the rise in global energy prices this year, already exceeding 150%. Bitcoin, sometimes seen as an inflation hedge, reached a five-month high of $58,550.

The dollar also rallied back to a nine-day low, taking the euro, British pound, Australian and New Zealand dollars all back.

On hopes the US Federal Reserve will tighten US monetary policy faster than previously expected, the greenback hit a more than one-year high on Tuesday, but is now down for October.

Both early US jobless claims and producer price inflation data are due later in the day. Earnings reports have also been prescribed from big-name US banks, including Bank of America, Wells Fargo, Morgan Stanley and Citi. [.N]

“This appears to be an excellent case of the buy fact type mentality of selling rumored,” said Neil Jones, head of FX sales at Mizuho. “The Fed reaffirmed the expectations of many investors of, I would suggest, holding long dollar positions.”

Additional reporting by Sujatha Rao and Elizabeth Hawkroft in London; Editing by Raisa Kasolowski


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