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Despite US Inflation Data, Global Shares Remain Near Record Highs

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U.S. Federal Reserve Chair Jerome Powell holds a press conference following a two-day meeting of the Federal Open Market Committee on interest rate policy in Washington, U.S., May 1, 2024. REUTERS/Kevin Lamarque/File Photo Purchase Licensing Rights

(CTN News) – On Tuesday, global markets traded around record highs ahead of US inflation data. Japanese bonds fell as the central bank reduced bond purchases.

The MSCI World Share Index was flat throughout the day but 0.3% behind its mid-March all-time high. American S&P 500 futures and European national and regional share benchmarks (.STOXX), several of which were at record levels, stayed constant.

The first quarter results season has been positive, but investors are cautious this week ahead of key US inflation data, which has lifted stock markets in past weeks.

At 1230 GMT on Tuesday, the US Producer Price Index will be the main macroeconomic event. However, Wednesday’s consumer inflation report, one of the month’s most crucial, will undoubtedly take center stage.

“People are waiting for tomorrow’s US CPI, but today is a warm-up,” said Nordea chief strategist Jan von Gerich.

Annual core CPI is expected to fall from 3.8% in March to 3.6% in April. Investors will watch to see if the first quarter’s positive surprises were an aberration or a pattern that would compel the Federal Reserve to keep interest rates high all year.

I think rising expectations make it hard to exceed them. Von Gerich inflation predicts that if we satisfy expectations, rates will fall after three good shocks.

The 10-year US Treasury yield was steady at 4.479% today, down from its five-month high of 4.739% in mid-April but still higher than 3.899% at the start of the year.

On Monday, the New York Fed reported that Americans expect inflation to rise to 3.3% in a year from 3.2% the month before.

British wages rose more than expected, but other data suggested the work economy was cooling. British gilts beat their European counterparts by a small margin.

Germany’s 10-year yield was 2.52%, while Britain’s was 4.17%.

In other business developments, Uber (UBER.N) announced a $1.25 billion deal to acquire Food Panda’s Taiwanese food delivery business and buy more shares in Germany. This move sent Delivery Hero (DHER.DE) up 23%, its biggest one-day gain.

Anglo American (AAL.L) updated its plan to avoid a takeover by BHP (BHP.AX) by examining options for its steelmaking coal, nickel, and platinum operations.

Inflation, Federal Reserve chair Jerome Powell will talk Tuesday at 1400 GMT.

On Tuesday, US President Joe Biden raised tariffs on Chinese computer chips, medical supplies, and electric cars.

Premarket trade saw US-listed Li Auto and Xpeng shares fall 2.5% and 3.1%, respectively, when China’s markets closed.

As mainland buyers keep coming in, Hong Kong’s Hang Seng index (.HSI) has surged 20% in a month and 30% from January’s lows.

The announcement that China will issue one trillion yuan in special bonds has investors excited about spending. Poor lending data also shows monetary easing is over. The Hang Seng had its highest volumes in 17 months last week.

UOB Kay Hian executive director Steven Leung says “some of my clients are asking me every day what to buy and when to buy because they still have an underweight position in Hong Kong stocks.”

“I think this situation can continue for a while.”

After Japan’s central bank dramatically lowered the number of inflation bonds it offered to buy in a regular purchase operation, benchmark 10-year Japanese government bond yields rose two basis points to 0.96%, the highest yield since November. This move garnered Asian notice.

But the disparity with US rates is still hundreds of basis points, so the weak yen will remain under pressure.

A trade low of 156.4 yen per dollar was reached. The euro held at $1.0797.

Brent futures fell 0.2% to $83.18 a barrel, while spot gold rose 0.3% to $2,342.

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Salman Ahmad is a seasoned writer for CTN News, bringing a wealth of experience and expertise to the platform. With a knack for concise yet impactful storytelling, he crafts articles that captivate readers and provide valuable insights. Ahmad's writing style strikes a balance between casual and professional, making complex topics accessible without compromising depth.

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