Global stocks little changed amid mixed inflation signs

London — Global shares were little changed on Wednesday, pausing after a six-day slump amid a mixed inflation picture, while supply concerns amid Russia’s ongoing invasion of Ukraine helped push oil prices higher.

Hawkish moves from the world’s top central banks in response to inflation have weighed on equity markets since the start of 2022, with the MSCI World Index about 10% lower over the period.

Data on Wednesday showed no let-up for Britain after inflation hit a 30-year high of 7%, though this came a day after a lower-than-expected underlying prices in the US had given some traders cause to hope policy would be tightened more slowly.

At 10.39am GMT, the MSCI World Index was flat at 689.80 points as most leading European indices were lower, with the Stoxx Europe 600 down 0.4%. However, the UK’s FTSE 100 recovered early falls to trade unchanged.

“Another month, another jump in inflation figures around the world,” said Oliver Blackbourn, portfolio manager at asset manager Janus Henderson.

“The increase in prices further ratchets up the pressure on the Bank of England to respond to dampen the squeeze on real incomes. However, fading growth forecasts show the danger to the economy from tightening too quickly or too far.”

Overnight in Asia, much weaker-than-expected import data from China weighed on the outlook, but added to views that Beijing could ease policy further, helping MSCI’s broadest index of Asia-Pacific shares outside Japan climb 0.6%.

Japan also posted weak machinery orders data, though its stocks closed higher on the US inflation data. US stock index futures pointed to a 0.4% gain at the open.

Data on Tuesday had shown US monthly consumer prices rose by the most in more than 16 years in March as war in Ukraine boosted the cost of petroleum to record highs, though underlying price pressures moderated.

The yield on 10-year Treasury notes rebounded on Wednesday and was last at 2.7519%, compared with a more than three-year peak of 2.836% before the inflation data. The two-year yield was 2.4261%.

In the eurozone, meanwhile, a key gauge of long-term inflation rose above 2.4% on Wednesday, above the European Central Bank’s 2% target. The ECB is scheduled to hold its next meeting on Thursday. Bond yields in the bloc rose in response, with Germany's 10-year yield up six basis points.

Oil prices rose after Russian President Vladimir Putin said that on-and-off peace talks with Ukraine had hit a dead end, fuelling supply worries, with Brent crude futures up 0.4% at $105.02 a barrel.

Corn futures were down 0.6% but still close to last month’s 11-year high. Gold bounced off its lows to trade up 0.5% at $1,977 an ounce.

In currency markets, the euro was flat against the dollar, but just above a five-week low. The dollar index was up 0.1% against a basket of currencies.

The New Zealand dollar was 1.1% weaker after the Reserve Bank of New Zealand raised interest rates by 50 basis points — its most aggressive hike in over two decades — but tempered its rate outlook.

The Bank of Canada meets later on Wednesday and is also expected to deliver a sharp hike.

Reuters