Stocks, Bonds Up As Asian Market Shakes Off Inflation Woes

Stocks and bonds were set to post their first weekly gains in a month on Friday, June 24, 2022, as investors bet on central banks taming inflation, as growth concerns weighed on commodities, Tom Westbrook reported for the Associated Press (AP).

Photo Insert: Since oil and food have been the primary drivers of inflation, the price drops have provided some relief to equities.

Copper, a harbinger for economic growth due to its wide range of industrial and construction uses, fell 3% in Shanghai and is down more than 7% for the week, the biggest weekly drop since the pandemic-driven financial markets crash in March 2020.

Oil declined overnight as well, with Brent oil futures down 2% on the week to $110.62 a barrel, while benchmark grain prices tumbled, with Chicago wheat down almost 9% on the week and at its lowest since March at $9.42 a bushel.

Bonds rose sharply on expectations that aggressive rate hikes would be limited, with German two-year rates falling 22 basis points, the most since 2008. The benchmark 10-year Treasury yield decreased 7 basis points overnight and remained stable at 3.094%.

Since oil and food have been the primary drivers of inflation, the price drops have provided some relief to equities. Following some significant recent losses, the MSCI (formerly Morgan Stanley Capital International) World stocks index is up 2% on the week.

MSCI's broadest index of Asia-Pacific shares outside Japan climbed 1% on Friday, boosted by short-sellers fleeing Alibaba (up 5%), on signs that China's technological crackdown is easing. Japan's Nikkei gained 0.8 percent for a 1.6 percent weekly rise, while S&P 500 futures were unchanged after the index gained almost 1% overnight.

The value of the US dollar against a basket of major currencies is barely below a two-decade high.

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