Shares Near Peaks, Dollar Mixes Higher

Global share indexes drifted near all-time highs on Tuesday and the dollar and government bond yields ticked-up higher. Moreover, some of the biggest economies pushed on with the easing of coronavirus restrictions.

Fuelling talks of an inflation spike was a surge in prices from wood to metals, as well as wheat and microchips.

Tech giants at Wall Street have surged during the pandemic and were  mostly pointing lower again. Sensitive cyclical sectors helped drive Europe modestly higher. These include energy, mining, and travel and leisure.

The U.S. economic momentum was not nearly enough yet to change anything. This was according to New York Fed head John Williams on Monday. 

On Tuesday, bond market borrowing costs rose, however there were signs that major central banks were still not rushing to reel in their massive stimulus schemes.  This kept the 10-year U.S. Treasury yields under 1.65% . Additionally, it kept Germany’s Bund yields below 13-month highs.

Australia’s central bank left its key interest rates overnight at near zero. This was for a fifth straight meeting and the bank pledged to keep its policies supportive for an extended period.

Stocks on the Move

MSCI’s broadest global index barely moved, just 1% off its record high.

In Australia, the S&P/ASX200 added 0.6% and Hong Kong edged up 0.7%. Asian trading was thin due to holidays in both China and Japan.

Taiwan’s stocks closed down 1.7% amid an unusual uptick in domestic COVID-19 infections. This came after Wall Street’s tech indexes had struggled on Monday. 

Analysts at BlackRock said in their weekly note that they see near-term volatility in inflation as the economic restart progresses. They believe markets under-appreciate potential for medium-term price pressures, their note added. 

Elsewhere, U.S. and European stock markets at around 1130 GMT on Tuesday, saw a sudden 0.5% drop in hefty volumes. One trader called it a “micro flash-crash”.

In four minutes, the Nasdaq stock futures fell 0.5%, while the S&P 500 e-mini futures 0.4%. They later added more losses to trade lower at 0.9% for Nasdaq stock futures and 0.6% for S&P 500 e-mini futures. 

Europe’s benchmark STOXX 600 index was last trading 0.8% lower.  It also turned negative during the quick-fire selloff.

The volatility seemed to boost demand for safe-haven bonds. The 10-year U.S. Treasury yield dropped almost 2 basis points to 1.591% before climbing back above 1.6%.