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  • Major stock indexes around the world climbed to new highs on Wednesday before shedding those gains as the U.S. dollar fell to three-week lows
  • Popular growth stocks slid on Wall Street, dragging the S&P 500 and the Nasdaq lower, while underpriced value stocks rose and lifted the Dow to a new record
  • In Europe, positive earnings from Germany’s SAP and French luxury goods maker LVMH helped the STOXX 600 index close slightly up, just below a record high set last week
  • In Asia, the Nikkei fell 0.4 per cent as rising COVID-19 cases raised concerns about Japan’s economic recovery
  • Notably, oil prices soared almost five per cent following a report that pointed to a possible rebound in demand

Major stock indexes around the world climbed to new highs on Wednesday, driven by a strong post-pandemic recovery, before shedding those gains as the U.S. dollar fell to three-week lows.

Popular growth stocks slid on Wall Street, dragging the S&P 500 and the Nasdaq lower, while underpriced value stocks rose and lifted the Dow to a new record.

U.S. import prices grew more than anticipated during March, thanks to higher costs for petroleum products and tight supply chains that indicate a coming period of increased inflation.

However, results from JPMorgan and Goldman Sachs suggest that high cash reserves and a lack of strong loan demand will not spur inflation as much as many economists have feared, thereby giving equities further room to run, according to Jack Janasiewicz, a portfolio strategist at Boston-based Natixis Advisors.

“What’s the corporate use of that money? Well, it’s loan demand. We’re simply not seeing that,” he said. “If you’re going to be in that inflation camp you want to see people using money and we’re certainly not seeing that right now.”

Janasiewicz added that high corporate debt issuance and accommodative government policies will push money into risk assets, thereby lifting prices.

At closing, the benchmark S&P 500 had retreated 0.41 per cent, while the tech-focused Nasdaq finished down 0.99 per cent and the Dow Jones Industrial Average added 0.16 per cent.

“It’s a day for cyclicals. That’s where the strength is,” said Tim Ghriskey, chief investment strategist at Inverness Counsel. “The little bit of selling we’re seeing is in tech plus.”

Across the Atlantic, positive earnings from German software firm SAP and French luxury goods maker LVMH helped the STOXX 600 index close slightly up, just below a record high set last week.

Germany’s DAX index ended the day down 0.2 per cent, with the country’s economic institutes cutting their joint 2021 growth forecast from 4.7 per cent to 3.7 per cent due to longer-than-expected coronavirus lockdowns.

Most Asia-Pacific indexes climbed overnight, led by Hong Kong’s Hang Seng. However, the Nikkei fell 0.4 per cent as rising COVID-19 cases raised concerns about Japan’s economic recovery with just 100 days to go before Tokyo is due to host the Olympics.

Further south, the New Zealand dollar rose to a three-week high after the country’s central bank said it would hold its official interest rate and asset purchase program steady.

Notably, oil prices soared almost five per cent following a report from the International Energy Agency and U.S. inventory data that pointed to a possible rebound in demand.

U.S. crude futures rose US$2.97 (roughly A$3.85) to US$63.15 (roughly A$81.80) a barrel, while Brent crude futures finished up US$2.91 (roughly A$3.77) at US$66.58 (roughly A$86.25) a barrel.

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