LONDON (Businesshala) – World markets remained focused on rising inflation on Thursday as banks and tech restarted global equities, oil and gas prices rose again, but both the dollar and benchmark government bond yields stalled. .
Record high Chinese factory gate inflation data overnight, which was later ahead of US manufacturer figures, meant the price pressure topic was very lively, but traders’ reaction seemed more nuanced.
The dollar, on bets on a 2022 US interest rate hike, moved to a more than a year high this week, with the 10-year US Treasury yield lower for the second day in a row, boosting global borrowing costs.
Europe’s STOXX 600 index also climbed to its highest point of the month as investors there recently cautioned. Wall Street futures also rose 0.5% as analysts digested a blizzard of big bank earnings from Bank of America, Citigroup and Morgan Stanley. [.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 will not turn into a stalemate – high inflation and stagnant growth – either.
Facebook, Microsoft, Amazon and mega-cap growth names including Apple and Google rose nearly 1% in pre-opening bell jockeys as their recent surge looks set to continue. [.N]
MSCI’s main index of Asian shares rose 0.6% in a 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 China Evergrande crisis continued. [.T]
Forex 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%, rising more than 150% already this year, driving global energy prices up. Bitcoin, sometimes seen as an inflation hedge, reached a five-month high of $58,550.
Meanwhile, the dollar rallied back to a nine-day low, holding the euro, British pound, Australian and New Zealand dollars all back.
The US Federal Reserve is expected to tighten US monetary policy more sharply than ever before, as the greenback hit a more than one-year high on Tuesday, but is now down for October.
“There is a little bounce for the euro, a little bit more bounce for the pound and the biggest bouncer is the kiwi dollar, so this is the G10 FX beta rally,” said Kit Jux of Societe Generale. The latest record low for Turkey’s lira comes after the country’s president ousted another batch of central bankers.
Early US jobless claims and producer price inflation data are also coming soon, further fueling the debate on inflation and Fed rate hikes.
“This appears to be a classic case of selling rumours,” said Neil Jones, head of FX sales at Mizuho, regarding the dollar’s fall. “The Fed reaffirmed the expectations of many investors of, I would suggest, holding long dollar positions.”