GLOBAL MARKETS-Stocks climb despite rise in US inflation; dollar on defensive

From Reuters - February 14, 2018

TOKYO (Reuters) - Asian stocks rose on Thursday after Wall Street brushed aside strong U.S. inflation data and surged, in a move that also saw the dollar pinned to two-week lows even as Treasury yields jumped in anticipation of more rapid U.S. interest rate hikes.

Spreadbetters expected European stocks to also open higher, with Britains FTSE seen rising 0.5 percent, Germanys DAX gaining 1 percent and Frances CAC advancing 0.8 percent.

MSCIs broadest index of Asia-Pacific shares outside Japan rose 1.3 percent.

Australian stocks climbed 1.15 percent and South Koreas KOSPI added 1.1 percent. Japans Nikkei advanced 1.5 percent following three successive days of losses that took it to a four-month low the previous day.

U.S. shares surged on Wednesday, with the Dow up 1 percent and the S&P 500 climbing 1.34 percent, as investors shrugged off the stronger-than-expected inflation data and snapped up shares of Facebook, and Apple. [.N]

S&P mini futures rose 0.4 percent on Thursday.

The VIX index - Wall Streets fear gauge and a measure of market volatility - has declined below 20, less than half the 50-point peak touched last week.

U.S. consumer prices rose slightly more than forecast in January as Americans paid more for gasoline, rental accommodation and healthcare, further raising inflation concerns and worries that the Federal Reserve may hike interest rates more than earlier expected.

That drove U.S. Treasury yields on most maturities higher, with those on benchmark 10-year notes hitting a four-year high of 2.928 percent.

Other data on Wednesday showed U.S. retail sales fell 0.3 percent in January to mark the biggest decline in 11 months. This was well below forecasts for an increase of 0.2 percent, suggesting slower growth could accompany higher inflation.

The combination of stellar U.S. CPI and weak retail sales data leaves investors in a precarious situation, wrote strategists at CitiFX.

Strong price data presents hawkish risks for the Feds dots at the March meeting. Three dots have been the baseline and now fourseems a greater risk. Meanwhile, retail sales results have caused a downgrade ofGDP estimatesacross the Street.


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