Global equities rise with the dollar, bond yields as US inflation soars
Market Reactions to US Inflation and Global Events
By Sinéad Carew and Elizabeth Howcroft
NEW YORK/PARIS, May 13 (Reuters) - MSCI's global equities gauge advanced with the dollar on Wednesday as investors assessed hotter-than- expected inflation data while they waited for a summit between U.S. President Donald Trump and China's Xi Jinping.
US Inflation Data and Economic Fallout
The Labor Department's Bureau of Labor Statistics said U.S. producer prices increased more than expected in April for their biggest gain since early 2022. This was the latest indication of an economic fallout from the U.S.-Israel war on Iran after Tuesday's U.S. inflation data showed consumer prices rose the most in three years, driven by an increase in energy-related costs.
Investor Concerns Over Inflation
"Given the concerns that already existed about the upside pressure on inflation this was one more data point to exacerbate those concerns," said Jim Baird, chief investment officer at Plante Moran Financial Advisors.
"It's one of a couple of key narratives and it's probably the key worry for investors in the near term. You've got these conflicting forces, the concerns around inflation and what that will mean for Fed policy and rates," he added.
Technology Sector Resilience
Countering inflation concerns was strength in the technology sector on Wall Street where the S&P 500 and the Nasdaq advanced on Wednesday with the biggest boosts from artificial intelligence-related technology shares.
AI and Chip Stocks Lead Gains
"In the face of continued hot inflation data, technology remains resilient," said Ryan Detrick, chief market strategist at Carson Group in Omaha, Nebraska. "And after some weakness yesterday, the chip stocks came soaring back today."
US-China Summit and Geopolitical Tensions
Meanwhile, President Trump and an entourage that included Nvidia chief executive Jensen Huang and Elon Musk were greeted with a lavish welcome in Beijing on Wednesday as he prepared to ask China's Xi Jinping to "open up" to U.S. business at the start of their two-day summit.
Expectations from the Summit
While some investors have held out hope that the talks could lead to progress in the Middle East war, Trump said on Tuesday that he did not think he would need China's help to end the conflict.
"What we'll hear is a message that it was a productive meeting. The reality will probably be more limited in terms of tangible progress regarding the war and trade relations. I would be very measured in my expectations. You have to be," said Plante Moran's Baird.
Market Performance Overview
Major Indices
The Dow Jones Industrial Average fell 67.36 points, or 0.14%, to 49,693.20, the S&P 500 rose 43.29 points, or 0.58%, to 7,444.25 and the Nasdaq Composite rose 314.14 points, or 1.20%, to 26,402.34.
MSCI's gauge of stocks across the globe rose 6.01 points, or 0.54%, to 1,109.33. Earlier the pan-European STOXX 600 index closed up 0.79%.
Bond Markets and Yields
US Treasury Yields
In bond markets, longer-dated yields reached the highest levels since mid-2025 before paring gains on Wednesday after producer prices rose more than economists had expected in April, then eased as traders evaluated the likely impact on Fed policy.
The yield on benchmark U.S. 10-year notes was flat at 4.471%, from 4.471% late on Tuesday while the 30-year bond yield rose 1.1 basis points to 5.04%.
The 2-year note yield, which typically moves in step with interest rate expectations for the Federal Reserve, fell 1.7 basis points to 3.979%.
Currency Markets
Dollar Strength and Global Currencies
In currencies, the dollar hit a two-week high following the latest hot U.S. inflation reading, while investors focused on the talks set to begin in Beijing between Trump and China's Xi.
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.16% to 98.49, with the euro down 0.22% at $1.1711.
Against the Japanese yen, the dollar strengthened 0.16% to 157.87, having briefly spiked Tuesday on "rate check" speculation, often seen as a precursor to intervention.
Sterling weakened 0.1% to $1.3523 as Prime Minister Keir Starmer's grip on power weakened.
Commodities Markets
Oil and Precious Metals
Oil futures declined as investors worried about possible U.S. interest rate hikes due to rising inflation and awaited updates on the summit in Beijing.
U.S. crude settled down 1.14% at $101.02 a barrel and Brent settled at $105.63 per barrel, down 1.99% on the day.
Gold Prices
In precious metals, spot gold fell 0.5% to $4,689.91 an ounce. U.S. gold futures rose 0.04% to $4,679.60 an ounce.
(Reporting by Sinéad Carew, Stephen Culp, Elizabeth Howcroft. Editing by Clarence Fernandez, Mark Potter and Keith Weir)
