GLOBAL MARKETS – Global equity gauge rises slightly with inflation, rates in focus…..
A global equities index rose slightly on Thursday after falling earlier in the day while Treasury yields rose as investors looked to the latest inflation data for clues on the potential for Federal Reserve interest rate cuts. A day after March’s hot Consumer Price Index (CPI) reading sent equity investors to the exits, Thursday’s data showed U.S. producer prices rose more slowly than expected last month with a cost of services increase blunted by falling goods prices. The producer price index (PPI) for final demand rose 0.2% versus economist expectations for 0.3% and a February increase of 0.6%. But New York’s Fed President John Williams said on Thursday that while the central bank has made considerable progress with inflation, it does not yet appear to need rate cuts. Richmond Fed President Thomas Barkin said the Fed is not yet where it wants to be to have confidence price pressure will keep easing.
On Thursday, traders were betting on a roughly 76% chance that the Fed will keep rates unchanged in June, versus 83.5% on Wednesday and an almost 51% chance they will stay the same in July compared with 57.6% on Wednesday, according to CME Group’s Fed Watch tool.
On Wall Street the Dow Jones Industrial Average <.DJI> fell 2.43 points, or 0.01%, to 38,459.08, the S&P 500 <.SPX> gained 38.42 points, or 0.74%, to 5,199.06 and the Nasdaq Composite <.IXIC> gained 271.84 points, or 1.68%, to 16,442.20. MSCI’s gauge of stocks across the globe rose 2.10 points, or 0.27%, to 774.88 after falling earlier by 0.46%. Europe’s STOXX 600 <.STOXX> index closed down 0.4% earlier.
Yields on U.S. Treasuries pushed higher with two-year yields breaching 5% for the first time since November before edging down, as investors worried over rebounding inflation after Wednesday’s data despite the softer-than-expected producer prices. The yield on benchmark U.S. 10-year notes <us10yt=rr>rose 2.2 basis points to 4.582%, from 4.56% late on Wednesday while the 30-year bond <us30yt=rr>yield rose 3.8 basis points to 4.6723% from 4.634%. The 2-year note <us2yt=rr>yield, which typically moves in step with interest rate expectations, fell 1.7 basis points to 4.9524% after earlier hitting 5.012% as investors continued to digest the data from Wednesday.
The dollar index <=USD> gained 0.07% at 105.27, with the euro <eur=>down 0.16% at $1.0725. Against the Japanese yen <jpy=>, the dollar strengthened 0.05% at 153.25. The yen’s recent slide against the dollar re-ignited intervention fears, as Japanese officials reiterated they would not rule out any steps to deal with excessive swings. Oil prices settled lower as sticky inflation dampened hopes for near-term U.S. interest rate cuts, but worries that Iran might attack Israeli interests kept crude near six-month highs. U.S. crude settled down 1.38% at $85.02 a barrel and Brent ended at $89.74 per barrel, down 0.82% on the day. Gold prices firmed after the inflation data while persistent geopolitical concerns added to the metal’s shine. Spot gold <xau=>added 1.84% to $2,375.67 an ounce. U.S. gold futures gained 1.86% to $2,372.90 an ounce.
Reporting by Sinéad Carew, David Barbuscia in New York, Marc Jones; Editing by Andrea Ricci, Will Dunham, Aurora Ellis and Sonali Paul.
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