GLOBAL MARKETS-Stocks firm near record as easing U.S. inflation fears lift Wall Street

  • 4/9/2021
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April 9 (Reuters) - Global stocks held firm near record highs on Friday as receding inflation fears in the United States pushed down bond yields and lifted Wall Street, though softness in Chinese shares capped gains in Asia. MSCI’s broadest gauge of world stocks set a record high earlier in the Asian session and last stood almost flat. Japan’s Topix gained 0.6% and Australian stocks hovered near a more than one-year top, while South Korea’s Kospi touched the highest intraday level since mid-February. Chinese shares were an outlier, with the CSI 300 sliding 1.3%, pushing down MSCI’s ex-Japan Asia index 0.4%, not helped by worries about further tension between Washington and Beijing. Benchmark 10-year Treasury yields held close to Thursday’s two-week trough near 1.6%, which had lifted U.S. tech shares and powered the S&P 500 to a record close. Yields had surged to the highest since January of last year at 1.776% at the end of March as a string of strong U.S. economic data stoked concern for a spike in inflation that could force the Federal Reserve to raise interest rates sooner than policymakers had so far signalled. However, an unexpected rise in the number of Americans filing new claims for unemployment benefits coupled with Fed Chair Jerome Powell’s reiteration on Thursday that inflation was not a worry helped calm bond market jitters. “Markets appear to have taken some comfort that they may have overdone the concerns around inflation, and therefore around rising interest rates,” said Michael McCarthy, chief markets strategist at CMC Markets. “At the moment, there’s no doubt that sentiment is wildly positive, and I’m not going to stand in the way of this train.” Powell signalled at an International Monetary Fund event that the central bank is nowhere near reducing support for the U.S. economy, saying that while economic reopening could result in higher prices temporarily, it will not constitute inflation. Aided by the pullback in yields, traders piled into megacap tech stocks such as Apple Inc, Microsoft Corp and Amazon.com Inc, which were the main drivers of the S&P 500. The S&P 500 gained 0.42% to a record high, while the Nasdaq Composite added 1.03%. Emini futures pointed to additional upside, rising 0.1% on Friday. “The movement in the (stock) market was predicated on rates,” said Thomas Hayes, chairman of Great Hill Capital. “As long as rates stay compressed there’s a bid for long duration earnings power, which was embodied in the rally in tech.” The U.S. dollar index, which tracks the greenback against six rivals, held near Thursday’s two-week low below 92, weighed down by lower Treasury yields. Spot gold eased to around $1,752 an ounce after jumping to a more than one-month peak of $1,758.45 on Thursday. Crude oil prices were little changed as Wall Street’s rally and the soft dollar offset concern over a big jump in U.S. gasoline stocks. U.S. crude rose 0.15% to $59.69 a barrel, while Brent eased slightly to $63.16 a barrel.

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