A broker looks at financial information on computer screens of the IG index at the trading floor in London, Britain February 6, 2018. REUTERS/Simon Dawson
- MSCI World Index unchanged; Asia ex-Japan Index up 0.6%
- Oil falls behind on weak data from China and Japan
- UK Inflation Hits 30-Year High; New Zealand hikes interest rates
LONDON, April 13 – Global stocks were little changed on Wednesday, pausing after a six-day slump amid a mixed inflation picture, while stalled peace talks between Russia and Ukraine pushed oil prices near recent highs held.
Hawkish moves by the world’s leading central banks as the Russian invasion of Ukraine added to inflationary pressures have weighed on equity markets since the start of the year, with the MSCI World Index (.MIWD00000PUS) down around 10%.
Wednesday’s data showed no slowdown for the UK after inflation hit a 30-year high of 7%, although that came a day after lower-than-expected prints in the United States had given some traders hope that politics could be tightened more slowly.
As of 07:11 GMT, the MSCI World Index was flat at 689.80 points, weighed down by declines in most of the leading European indices. The UK FTSE 100 (.FTSE) lost 0.1%.
“The steepest rises in a generation have unsettled financial markets as investors digest the unsavory prospect of tougher rate hikes,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.
In Asia, much weaker-than-expected import data from China weighed on the outlook overnight, but prospects that Beijing could ease policy further helped MSCI’s broadest index of Asia-Pacific equities outside Japan (.MIAPJ0000PUS) to fall by 0. 6% climbed.
Japan also released weak machinery orders data, although its shares closed higher on US inflation data. US stock index futures opened for a 0.5% gain.
Data released on Tuesday showed that monthly US consumer prices rose at their fastest rate in 16-1/2 years in March, as the war in Ukraine pushed gas costs to record highs, emphasizing the case for a 50 basis point rate hike by the US government Federal Reserve cemented next month.
However, underlying monthly inflationary pressures eased as non-food and energy commodity prices fell by the most in two years. Continue reading
The data sent US yields lower on Tuesday, posting seven straight sessions of gains, although they gained some ground late in the day and in Wednesday’s trading.
The 10-year Treasury yield was 2.7270% compared to a more than three-year high of 2.836% ahead of the inflation data.
The two-year return was 2.4241%.
The yield moves “gave the rhetoric a signal that US inflation is likely to have peaked or is very close,” said Clara Cheong, strategist at JPMorgan Asset Management.
“While this is unlikely to change the Fed’s stance from a 50 basis point hike in May, if inflation continues on this path, it will put less pressure on it to be overly aggressive in the second half of the year.”
In European markets, the 10-year German government bond yield recouped some of the previous day’s decline, rising nearly 7 basis points.
Oil prices remained steady around recent highs, with Brent crude futures unchanged at $104.59 a barrel after Russian President Vladimir Putin said ongoing peace negotiations with Ukraine “have hit another deadlock for us.” “.
Corn futures fell 0.8% but still remained close to last month’s 11-year high.
Gold was unchanged at $1,967 an ounce.
In FX markets, Putin’s comments were a key driver as the euro gained 0.1% against the dollar but was just above a five-week low. The dollar index was flat. FRX
The New Zealand dollar had a busy day, rallying as high as $0.6901 and falling as low as $0.6808 after the Reserve Bank of New Zealand hiked interest rates by a whopping 50 basis points – the most aggressive hike in over two decades – but they had tempered interest rate outlook. It was last down 0.8% to 0.67975.
The Bank of Canada meets later on Wednesday and is also expected to deliver a strong hike. Continue reading
Edited by Christopher Cushing and Kim Coghill