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Before the end of the two-day policy meeting of the U.S. Central Bank on Wednesday, global stock markets rose slightly, which will give investors a glimpse of official views on the inflation outlook.
The S&P 500 index was flat in early trading, but the technology-focused Nasdaq Composite Index rose 0.3%. On the other side of the Atlantic, the Stoxx Europe 600 Index rose 0.2%, and the FTSE 100 Index rose the same rate.
The main promoters of the United States include several energy companies such as Diamondback Energy, ExxonMobil, Occidental Petroleum and Halliburton, because the demand for oil remains high due to the lifting of pandemic containment measures.
The global benchmark Brent crude oil rose 0.6% to US$74.46 per barrel, the highest level since April 2019. US benchmark West Texas Intermediate crude oil rose 0.2% to US$72.26 per barrel, the highest since October 2018.
Luca Paolini, chief strategist at Pictet Asset Management, said: “The general feeling is that this may be too good to be true,” referring to stocks on both sides of the Atlantic that have remained at historical highs. “But as long as the global economy continues to perform well, the market will continue to rise.”
The “dot plot” released by the Federal Reserve on Wednesday will provide insight into how high U.S. central bank officials expect inflation to rise this year and next.
“The key part of the Wednesday press conference that deserves attention is the Fed Chairman’s recognition [Jay] Quill Intelligence CEO Danielle DiMartino Booth said that Powell said that dwindling trains are being discussed. “Officials are considering a timetable when they will communicate to the market gradually. Reduced time for trains to leave the station.”
The appointment of the well-known antitrust advocate Lina Khan as the chairman of the Federal Trade Commission does not seem to have had a serious impact on large technology companies. Apple, Amazon, Facebook and Alphabet have hardly changed in early trading.
In the UK, inflation in May rose According to data released on Wednesday, the year-on-year increase was 2.1%, reflecting the rising cost of clothing and dining out, and surpassing the Bank of England’s 2% target. The Bank of England said last month that it would slow down its bond purchase program during the pandemic, although it emphasized that this does not represent a change in its policy.
Pictet’s Paolini said that the UK’s inflation outlook will be affected by labor shortages in many industries, noting that there is already significant upward pressure on wages.
Although policymakers in Europe and the United States say they see price increases as a temporary effect of economic reopening, central banks around the world are struggling to cope with rising inflation.
“This is not a local phenomenon,” said William Sells, HSBC’s chief investment officer for private banking and wealth management. “Around the world, we are seeing increased inflation due to the base effect of gasoline prices [in] Compared with last year’s low oil prices, some bottlenecks have appeared in the supply chain, and retail and hotel demand has rebounded. “
In the United States, investors expect that the Fed’s discussions on when to start scaling back its monthly asset purchase plan may begin as soon as possible. on WednesdayThe European Central Bank said last week that it would stick to its bond purchase plan.
After the global rebound last week, bonds on both sides of the Atlantic have remained stable, although strong inflation prospects usually reduce the attractiveness of their fixed interest payments.
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