Global shares inched up on Monday as a U.S. holiday tempered volatility ahead of minutes of the latest Federal Reserve meeting even though data on core inflation has raised the risk of interest rates heading higher for longer.
The dollar, which is this month on track for its largest one-month rise since September, eased a touch, reflecting a retreat in risk aversion among investors.
With U.S. markets shut for the Presidents’ Day holiday, non-U.S. assets got some respite from the relentless pressure of last week.
The MSCI All-World index (.MIWD00000PUS) rose 0.2%, helped by modest gains in Europe, where the STOXX 600 (.STOXX) rose 0.1%, as gains in mining shares offset a decline in the tech sector.
A surge higher in both stock and bond prices in the first six weeks of the year came to a screeching halt, after a flurry of U.S. data suggested the world’s largest economy is holding up far better than expected, which means interest rates will have to rise further and take far longer to decline.
“Until recently, the market debate was all about soft-landing or hard-landing, recession or no recession. However, the real world is now not playing ball, prompting investors to come up with the idea of ‘no-landing’ at all,” Kingswood chief economist Rupert Thompson said.
“This new concept of ‘no-landing’ is not really that helpful, not least because, as any airline pilot will testify, there is ultimately either a soft or hard landing. Arguably, the day of reckoning has just been postponed until the second half of the year with any U.S. recession now looking more likely to occur then, if one occurs at all,” he said.
Having dismissed warnings from U.S. policymakers that inflation is too high and too persistent for comfort, investors are starting to accept they may have been overly optimistic in their assumptions.
Source: www.reuters.com
