General view of the stock exchange in Frankfurt, Germany, June 29, 2015. REUTERS/Ralph Orlowski/File Photo

WASHINGTON, April 13 (Reuters) – Global investor optimism lifted stocks on Wednesday despite unclear inflation forecasts as bank profits and oil supply concerns boosted business sentiment.

The Japanese yen weakened past the 126 yen mark against the dollar on Wednesday for the first time since 2002, while the euro was pinned at a one-month low as investors bought the US currency after hawkish comments from Federal Reserve officials.

The prospect of rapid and aggressive US interest rate hikes and growing market expectations that the Bank of Japan will keep rates extremely low in the near term fueled declines in the Japanese currency against the dollar.

Meanwhile, US Treasuries yields have fallen – and inflation data has not deterred investors from believing that inflation may have peaked.

The pan-European STOXX 600 index (.STOXX) rose 0.03% and the MSCI gauge of stocks across the world (.MIWD00000PUS) gained 0.79%.

Stock markets suffered from hawkish moves by the world’s major central banks in response to inflation, analysts said.

But Wednesday’s data showed no letup for Britain after inflation hit a 30-year high of 7%, although it came a day after weaker-than-expected US printing had gave some traders reason to hope that the policy would be tightened more slowly. .

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

“Rising prices are further increasing pressure on the Bank of England to react to ease the pressure on real incomes. However, the downward growth forecast shows the danger to the economy of a tightening that is too rapid or too great.”

On Wall Street, the Dow Jones Industrial Average (.DJI) rose 0.74%, the S&P 500 (.SPX) gained 0.89% and the Nasdaq Composite (.IXIC) gained 1.75%.

Investors, expecting lackluster results from the biggest U.S. banks, eyed income from investment banks, which stagnated after Russia’s invasion of Ukraine in late February. In the first quarter, the total value of pending and closed deals fell to its lowest level since the second quarter of 2020, according to data from Refinitiv.

Overnight in Asia, much weaker-than-expected import data from China weighed on the outlook but added to sentiment that Beijing could ease policy further, helping the MSCI index the most. Asia-Pacific ex-Japan equities (.MIAPJ0000PUS) to close up 0.89%.

Japan also posted weak machinery orders data, although its shares closed higher on US inflation data which showed consumer prices rose the most in 16½ years in March, the war in Ukraine has driven the cost of gasoline to record highs, although underlying inflationary pressures have moderated. Read more

FIRM GOLD OIL

Following the previous day’s plunge, the yield on 10-year Treasuries rose on Wednesday and last fell 5.3 basis points to 2.674%, from a three-year peak of 2.836%, ahead of the data. on inflation.

The two-year US Treasury yield, which generally moves in line with interest rate expectations, fell 5.5 basis points to 2.334%.

“The most important question this year is how the Federal Reserve will respond to rising levels of inflation,” said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance in Charlotte, North Carolina.

“Expectations for short-term interest rates have jumped and long-term interest rates have risen.”

In the eurozone, meanwhile, a key gauge of long-term inflation briefly topped 2.4% on Wednesday, above the European Central Bank’s 2% target ahead of its next meeting on Thursday.

In response, the bloc’s bond yields climbed, with Germany’s 10-year yield at 0.810%.

Oil prices rose after Russian President Vladimir Putin said on-and-off peace talks with Ukraine were at an impasse, fueling supply concerns as US crude recently rose 3.51% at $104.13 a barrel. Read more

Brent was at $108.64, up 3.82% on the day.

Gold bounced off its lows to add 0.6% to $1,978.03 an ounce.

In the currency markets, the euro was last up 0.52% at $1.0882. The US dollar climbed to a near 20-year high against the weak yen on Wednesday, as the Federal Reserve’s aggressive tightening contrasted sharply with the Bank of Japan’s ultra-loose monetary policy.

The greenback hit 126.32 yen, its highest since June 2002. However, the dollar index last fell 0.455% as the euro rose 0.53% to $1.0883 . XRF

The New Zealand dollar fell 1.1% after the Reserve Bank of New Zealand raised interest rates by 50 basis points – its most aggressive hike in more than two decades – but tempered its rate outlook.

Meanwhile, the Bank of Canada on Wednesday hiked interest rates by half a percentage point – its biggest step in more than two decades – and promised further hikes to combat soaring inflation which is partly caused by the war in Ukraine.

The central bank raised its overnight rate from 0.5% to 1%. He also said he would allow the government bonds she accumulated during the COVID-19 pandemic to disappear as they mature from April 25, initiating what is known as a squeeze. quantitative. Read more

Additional reporting by Simon Jessop and Alun John in London Editing by Kim Coghill, Alexander Smith and Chizu Nomiyama

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