New York- A market gauge of global shares rose on Tuesday, as European yields eased on consumer prices for March that showed that the pace of inflation was not spiking as some feared.
The consumer price index jumped 0.6%, the largest gain since August 2012 as massive vaccinations and a rising fiscal stimulus unleashed pent-up demand. But the data is unlikely to change Fed Chair Jerome Powell's view that higher inflation in the coming months will be transitory.
We 're just going to have a temporary flame-up of prices, but there will not be any structural inflation that's here to stay, said Carlo Franchini, head of institutional clients at Banca Ifigest SpA in Milan. Fed comments continue to be conciliatory.
The U.S. dollar fell and the price of inflation-hedge gold rebounded from its lowest in more than a week. But the equity markets took the data in stride, especially the technology-heavy indexes whose stocks could be affected by rising debt costs.
MSCI's stock gauge across the globe rose 0.23%, while the pan-European STOXX 600 index increased 0.13%. The top five holdings of the World Index all-country are the major U.S. technology companies.
On Wall Street, the Dow Jones Industrial Average 0.37% fell, the Nasdaq Composite 0.11% and the S& P 500 increased 0.5%.
Asian stocks gained support overnight on China trade data that showed exports in dollar terms rose more than 30% from a year earlier, short of expectations. Imports have jumped 38%, their fastest pace in four years, suggesting a post-pandemic recovery in Chinese spending.
MSCI's broadest index of Japan-Pacific shares outside Asia gave up most of its gains and closed down 0.1%. China's blue-chip index dropped 0.2%; Treasury yields are influenced by increased foreign demand while lower bond yields and the cost of debt will drive higher-risk equity assets, said Steven Oh, global head of credit and fixed income at PineBridge Investments.
The Treasury market reaction was effectively a collective yawn in continuing the trend that market yields are largely unrelated to economic data, Oh said.
Inflation and the data are important in determining Treasury yields, but it's been and will be a secondary factor for now.
Benchmark notes fell 1.7 basis points to yield 1.6552%, well below the 14 month high of 1.776% reached on March 30.
Later on Tuesday, the US Treasury will auction$ 24 billion of 30 year bonds after Monday's three and 10 year note auctions performed fairly smoothly.
The dollar briefly spiked on the CPI data before reversing course and dipping to three-week highs after reaching multi-month peaks in March as markets anticipated fiscal stimulus would spur faster US economic growth and higher inflation.
The dollar index has fallen 0.167%, with the euro up 0.23% to$ 1.1936.
The Japanese yen strengthened 0.16% against the greenback at 109.19 per dollar. On Monday, the Boston Federal Reserve Bank President Eric Rosengren said that the U.S. economy could see a significant rebound this year due to tighter money and fiscal policies, but the job market still faced weakness.
He said that with inflation still under the 2% target rate, the current monetary policy remained in the appropriate direction.
On Tuesday, Bitcoin hit a record$ 63,199 to extend its 2021 rally to new heights a day before the listing of Coinbase shares in the United States.
Brent crude futures rose$ 0.66 to$ 60.34 a barrel; U.S. crude futures have increased$ 64 to$ 63.94 a barrel.