Inflationary anxiety lifts stocks but holds back the dollar

London — Thursday’s global market continued to focus on rising inflation as high-tech equities restarted global equities and oil and gas prices rose again, but both dollar and benchmark government bond yields stagnated. bottom.

Overnight record high Chinese factory gate inflation data, following Wednesday’s stronger-than-expected U.S. consumer price index, meant that the price pressure theme was very alive, but from traders The reaction looked more subtle.

The dollar, which was pushed up to a year-long high this week by growing bets on rising US interest rates in 2022, fell for the second straight day with a 10-year US Treasury yield. World borrowing costs.

The STOXX 600 index in Europe also rose to its highest this month as investors set aside recent attention. Wall Street futures added 0.5% ahead of more inflation data and subsequent megabank earnings.

Kiranganesh, Head of Multi-Assets at UBS Global Wealth Management, said:

“The individual (central bank) governors sound a little more cautious, but we don’t see any significant rate hikes,” Ganesh added, predicting that stagflation (high inflation and stagnant growth) will not change. bottom.

MSCI’s key Asian equities index rose 0.6% on its fifth rise in six sessions. Japan’s Nikkei Stock Average rose 1.4%, but shares in Chinese real estate companies suffered more losses in Shanghai as the Evergrande crisis continued.

The FX and commodity markets were sending some mixed signals. Gold, often regarded as a hedge against rising inflation, stabilized after enjoying its best session on Wednesday’s seven months.

Oil Bull pushed Brent crude back to $ 85 a barrel. Natural gas has risen 2% and has already skyrocketed by more than 150% this year, boosting global energy prices. Bitcoin, sometimes boasted as an inflation hedge, has risen to a five-month high of $ 58,550.

The dollar also returned to its nine-day lows, with the euro, British pound, Australian and New Zealand dollars all recovering.

Tuesday’s greenback hit a year-long high, but is now down in October, with expectations that the Federal Reserve will tighten US monetary policy sooner than previously expected.

Both US first unemployed billing and producer price inflation data are scheduled for later in the day. Revenue reports are also coming from well-known US banks such as Bank of America, Wells Fargo, Morgan Stanley and Citi.

Neil Jones, Head of Forex Sales at Mizuho, ​​said: “The Fed has confirmed the expectations of many investors. I suggest, but it holds a long dollar position.”

Mark Jones