U.S. retail giant Target Corp, which is offering discounts to clear its inventory, caused global stocks to rebound as it signaled that inflation remained at an all -time high.
Target’s action came after a change in consumer buying patterns, following an aggressive rate hike by the Australian central bank (RBA) yesterday, which forced the company to lower its quarterly profit margin forecast and lower its 2nd quarter price projection in a surprise revision.
This indirectly signals that the Federal Reserve (Fed) and other major central banks will maintain interest rate hikes to curb rising inflation.
Rick Meckler of Cherry Lane Investments commented that it was good news that led to a continued rate hike by the Fed, dismissing expectations of a reduction in previous base rate hikes.
As a result, the equity market regained momentum with the global benchmark MSCI stocks reaching 0.40% while the STOXX 600 index fell 028%.
On Wall Street, the average Dow Jones Industrial index rose 0.8%, the S&P 500 hit 0.8%and the Nasdaq Composite added 0.94%.
Meanwhile, the RBA, which made a surprise move by raising the rate by 50 basis points in 22 years, was also a factor, apart from causing the US treasury yield to decline.
The 10 -year Treasury Note fell 5.3 basis points at 2.985% while the benchmark German bond yields slipped 1.6 basis points ahead of the European Central Bank (ECB) meeting which is expected to begin a tightening cycle.
Currency movements saw the dollar index fall 0.146% with the Euro up 0.09% at $ 1.0704 and the Yen up 0.57% after the Bank of Japan (BOJ) governor promised to support the economy despite rising prices.
The Australian dollar also rose 0.76% after the RBA decision before declining again while Sterling added 0.49% at $ 1.2592.
The commodity sector saw US crude futures rise 91 cents to $ 119.41 a barrel while Brent oil jumped $ 1.06 to $ 120.57 a barrel on supply concerns.
Gold futures also climbed 0.5% at $ 1,852.10 an ounce as the US dollar depreciated again.
