Stocks Extend Record, U.S. Treasuries Hold Steady: Markets Wrap

(Bloomberg) -- Global stocks extended a record high and U.S. Treasuries were steady amid growing confidence inflation will prove transitory, leaving scope for continued central-bank support.

The MSCI All Country World Index was poised for a fourth weekly advance. S&P 500 Index futures were little changed after the benchmark gauge scaled a new high Thursday. The dollar fell for a second day, while gold caught a bid as an inflation hedge.

Faster-than-expected U.S. consumer-price growth for May was largely driven by categories associated with economic reopenings, bolstering the view price pressures may ease later in the year. With the Federal Reserve setting a high bar for reconsidering its dovish stance, the data ended up stoking risk appetite across global markets.

“The bond market is falling in line with the Fed’s thinking that inflation is transitory and does not warrant tapering of monetary stimulus any time soon,” said Anu Gaggar, senior global investment analyst at Commonwealth Financial Network.

The U.S. central bank’s view that inflationary pressures are temporary now dominates global markets, signaling any changes in ultra-accommodative policy would happen very gradually. That approach was also reinforced across the Atlantic Thursday, as the European Central Bank raised its inflation forecast and renewed its pledge to maintain faster emergency bond-buying to sustain the euro area.

The 10-year U.S. Treasury yield held near 1.43%, its lowest point since early March. The benchmark rate is heading for a 12 basis-point decline this week.

European stocks opened higher, with defensive sectors such as telecom and health care leading gains. The Stoxx 600 gauge headed for a fourth weekly increase.

In South Korea, bonds extended losses after the central bank chief’s comments on normalizing policy added to signs the nation may be among the first in Asia to hike interest rates.

Elsewhere, crude oil consolidated above $70 a barrel amid an improving demand outlook. Bitcoin extended its rebound to a third day, trading around $36,700. Later Friday, investors will be keeping an eye on the opening of the Group of Seven leaders’ summit in the U.K.

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These are some of the main moves in markets:

Stocks

• S&P 500 futures rose less than 0.1% as of 7:10 a.m. in London. The index rose 0.5%
• Nasdaq 100 futures were up 0.1%. The gauge rose 1.1%
• Japan’s Topix index dipped 0.1%
• Australia’s S&P/ASX 200 index rose 0.2%
• South Korea’s Kospi index added 0.7%
• Hong Kong’s Hang Seng index climbed 0.5%
• China’s Shanghai Composite gauge slid 0.3%
• Euro Stoxx 50 futures increased 0.1%

Currencies

• The Bloomberg Dollar Spot Index lost 0.1%
• The euro was at $1.2190, rising 0.2%
• The British pound traded at $1.4176
• The Japanese yen was at 109.41 per dollar
• The offshore yuan was at 6.3843 per dollar

Bonds

• The 10-year U.S. Treasury yield rose one basis point to 1.44%

Commodities

• West Texas Intermediate crude traded at $70.29 a barrel
• Gold traded at $1,901.44 an ounce, up 0.2%

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