Japan shares stay near record highs as investors bet the Fed is further behind

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Japan shares stay near record highs as investors bet the Fed is further behind

Fed stimulus has been in place for some time, seen still in place

Tokyo, June 9 - World stock prices held near record highs on Wednesday as asset yields flirted with their lowest levels in a month as investors bet the Federal Reserve is further behind from demonetizing its economic stimulus.

MSCI's all-stock global index last stood at 716.64 after scaling an intraday high of 718.19 on Tuesday, which was led by gains in European stocks.

Almost 48 percent of Japan's shares were traded outside Asia. The broadest index of Asia-Pacific stocks exceeded 0.15% and the average Japanese is 0.25% down.

On Wall Street, the S&P 500 was steady on Tuesday and near its record high as investors looked to Friday's inflation data.

On the other hand, the 10-year U.S. debt yield hit 1.513% in March, its lowest level in a month, and down a quarter of a percentage point from a 14 month peak of 1.776%. It stood at 1.533% in 2012 -- almost flat so far on Wednesday.

As the recovery in the job market is contained, any discussion at the Fed on tapering is unlikely to gain momentum, even if it gets going very soon, said Naokazu Koshimizu, senior rate strategist at Nomura Securities.

So these who had invested on the steepening of the yield curve are attracted to the position and some investors are also buying today to earn portfolios.

The U.S. payrolls data last Friday showed that the job hiring did not grow as quickly as economists expected, despite growing signs of a labour shortage.

Many analysts think more evidence of strong job growth would be required for the Federal Reserve to increase its debate on tapering.

The US central bank has said that inflation this quarter would be transitory and would not threaten price stability, one of its key mandates.

3.4-year consumer price watch on Thursday is expected to show that the overall annual inflation rate has declined to 4.7% and the core inflation rate increased to 3.4%.

Although these readings are well above the Fed inflation target of 2%, many economists expect the inflation rate to ease in the coming months allowing the Fed to wait before taking any measure.

However, some investors remained cautious that a tight labour market could lead to unexpectedly high inflationary pressures.

The U.S. labour market looks really tight. At the moment, workers for various reasons are not coming back. But they will eventually return and as the payrolls increase, companies will have to raise wages, said Yoshinori Shigemi, macro strategist at Fidelity International.

The dollar fetched flat at $1.2173, while the euro 109.50 yen was sold.

Investors have scaled back expectations that the European Central Bank may announce a plan to reduce its asset buying when it reviews policies on Thursday.

Oil prices remained extremely stable after US Secretary of State Antony Blinken said that even if the United States was to reach a nuclear deal with Iran, hundreds of sanctions on Iranian would remain in place.

U.S. crude futures opened at $70.21 to the first time since October 2018 and also stood above $70 per barrel on Tuesday, up 0.2%.

Brent futures rose 0.2% to $72.35, remained near their highest level since early 2020.

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