1Global stock markets are hitting record highs as investors respond positively to receding inflation fears and bond yields near two-week lows.
MSCI’s broadest gauge of world stocks set a record high in Asian trading Friday (April 9). The index gained more than 1.5% this week. Japan’s Topix gained 0.6% and Australian stocks hovered near a 13-month high on Friday, while South Korea’s Kospi touched its highest intraday level since mid-February.
At the same time, Britain’s FTSE 100 index hit its highest level in more than a year, bringing gains for the week to nearly 3%, helped by the country’s vaccine rollout.
The new highs came after U.S. Federal Reserve Chairman Jerome Powell signaled at an International Monetary Fund meeting that the central bank was nowhere near reducing support for the U.S. economy, saying that while the economic reopening could result in higher prices temporarily, it will not result in runaway inflation.
Following the comments, traders piled back into large cap technology stocks such as Apple, Microsoft and Amazon, which have helped push the S&P 500 index to record highs this week.
Benchmark 10-year Treasury yields held close to Thursday’s two-week low near 1.6%. Yields had surged to their highest level since January 2020 at 1.776% at the end of March as a string of strong U.S. economic data stoked fears of a spike in inflation that could force the Federal Reserve to raise interest rates sooner rather than later.
But Powell has been actively messaging that the U.S. central bank is not worried about inflation in the near and medium term.
