Global stocks waver near record highs with US inflation data in focus, as bitcoin rebounds from its 10% slump

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Global stocks steadied around their all-time highs on Wednesday after a further calming of inflation fears helped drive a major rally in sovereign bonds.

Futures on the Dow Jones, S&P 500, and Nasdaq were mostly in the green, suggesting a higher start to trading later in the day.

US indices have proven unwilling to stray from their current levels in the last few days, said Connor Campbell, a financial analyst at SpreadEx. “Perhaps investors are waiting until tomorrow’s inflation data is revealed,” he said.

Investors are awaiting the US consumer price index for May, due to be released Thursday, as they assess whether rising inflation may nudge the Federal Reserve into rolling back its ultra-easy monetary policy. According to Dow Jones, economists expect the figure to rise 4.7% year-on-year.

The yield on the 10-year US Treasury note fell to its lowest level in almost three months, by 2% to 1.52%, suggesting an increase in demand for bonds.

UBS said concerns that US GDP growth is close to a peak could help explain why equities have struggled to break out of their range in the past few months.

“While concerns about peak growth in the US may have taken some wind out of the market’s sails, we think investors should look at other offsetting tailwinds,” Mark Haefele, chief investment officer at UBS Global Wealth Management, said. “We expect the cyclical recovery momentum to persist in the second half of the year, albeit with some bouts of volatility.”

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Bitcoin recovered from its previous day’s 10% slump by climbing 4% to $34,240. The digital asset was trading around $31,036 on Tuesday, partly prompted by US authorities’ ability to use a private key to retrieve some of the Colonial Pipeline ransom.

“It seems the FBI has used some other chicanery to obtain the private key other than cracking the bitcoin algorithm, to the relief of bitcoin evangelists and cybercriminals everywhere,” said Jeffrey Halley, a senior market analyst at OANDA. “That saw it pare much of yesterday’s losses.”

In the UK, the government is considering delaying the final lifting of its COVID-19 lockdown, initially scheduled for June 21. Cases in the country are now up 61% compared with last week, but still comparatively lower than in the winter months.

London’s FTSE 100 fell 0.5%, while the Euro Stoxx 50 and Frankfurt’s DAX were about flat.

Rising inflation in China – up from 0.9% in April to 1.3% in May – can shoulder some of the blame, having sparked a flurry of losses in the FTSE’s mining sector, Campbell said. UK miners Rio Tinto, Anglo American and Antofagasta were all down more than 1.2%.

Asian equities mostly traded slightly lower, but China’s slight increase in inflation and officials discussing coal price controls lifted markets on the mainland.

China’s Shanghai Composite rose 0.3%, Japan’s Nikkei fell 0.3%, and Hong Kong’s Hang Seng was about flat.

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