Global stocks edge higher after Fed officials say inflation will be temporary, while bitcoin tops $40,000

Stock Market Traders

Global stocks rose on Wednesday, after dovish remarks made by Federal Reserve officials helped soothe some of the investor concern about rising inflation.

Futures on the Dow Jones, S&P 500, and Nasdaq rose 0.3%, suggesting a modestly higher start to trading later in the day.

Fed Vice Chair Richard Clarida said on Tuesday it would be possible to discuss scaling back the pace of asset purchases, and that pricing pressure will prove to be “largely transitory.”

He also said macro data is likely to remain volatile, citing the most recent jobs report that “really highlights a fair amount of near-term uncertainty about the labor market.”

San Francisco Fed Bank President Mary Daly told CNBC on Tuesday economic progress looks encouraging, but it isn’t yet time to change policy. “What we’ve seen is some really bright spots, some very encouraging news,” she said. “It gives me hope, and I am bullish for the future. But it’s too early to say that the job is done.”

Bitcoin rose above $40,000, as the cryptocurrency market regained some ground after last week’s broad sell-off. Ethereum’s ether rose 8% to $2,843 and dogecoin rose 2% to 35 cents

After recording their first weekly advance in five weeks, US tech shares were outperforming again. But UBS doesn’t expect the shift back toward those pricier areas of the market to last, as the environment will continue to favor other sectors.

Read More: Warren Buffett is hoarding $80 billion of cash, cleaning up his stock portfolio, and declining to bash bitcoin. Veteran investor Thomas Russo says why that strategy will ultimately pay off.

“While bouts of Treasury market volatility may occasionally revive pandemic-era mega-cap outperformance, we believe economic reopening and rising inflation remain the most potent near-term drivers for global financial markets,” Mark Haefele, chief investment officer at UBS Global Wealth Management, said. “We think the reflation trade has further to run, favoring sectors such as financials and energy.”

Elsewhere in Europe, the UK government issued some revisions to its own guidance for eight areas in the country where the variant first detected in India is spreading the fastest. People are being encouraged to meet outdoors where possible, rather than indoors. France and Germany are considering imposing tighter restrictions on those travelling to and from Britain.

Investors may be warily awaiting more news on this new variant of COVID-19, and what that might mean for the UK’s plans to ease lockdown conditions, according to Connor Campbell, a financial analyst at SpreadEx.

But European markets took their lead from the US and edged higher. London’s FTSE 100 rose 0.2%, broadly in line with the rest of the region, as the Euro Stoxx 50 rose 0.2%, and Germany’s DAX rose 0.1%.

Asian markets too posted gains after the Fed’s comments on inflation. China’s Shanghai Composite rose 0.3%, Japan’s Nikkei rose 0.3%, and Hong Kong’s Hang Seng rose 0.7%.

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