Markets across Asia and Europe rose Wednesday as inflation worries ease, while vaccine and reopening optimism reinforce expectations for a strong global recovery.

After rallying for more than a year, equities have in recent months been jolted by fears that a forecast surge in economic activity -- fuelled by reopenings, stimulus and vaccinations -- will send prices soaring and force central banks to wind back their ultra-loose monetary policies sooner than flagged.

A succession of Federal Reserve officials have continued to repeat the mantra that while the rebound will likely fan inflation, it will not last too long and they will not step back from their supportive measures -- including record low interest rates -- for the foreseeable future.

Those pledges have largely been brushed aside by traders who fear the Fed is in danger of moving too late, with explosive inflation data last month adding to their unease.

However, analysts said the concerns may be subsiding, while the latest drive to soothe concerns by high-ranking Fed members appeared to be bearing fruit. The yield of long-term US Treasuries, a key gauge of future interest rates, has stabilised after their recent sharp increase set off alarm bells.

That was likely to open the road for markets to resume their upward march, with Asia seeing broad advances to extend Tuesday's rally.

Tokyo, Hong Kong, Shanghai, Seoul, Taipei, Mumbai and Wellington all enjoyed gains, while Manila added more than two percent following recent losses. Sydney and Seoul dipped, though.

London, Paris and Frankfurt were all up in early trade.

"Inflationistas look like they might be ready to throw in the towel," said OANDA's Edward Moya.

"We are supposed to be seeing accelerating growth and mounting price pressures, but right now the surge across commodity prices has eased (copper, lumber, iron ore, and even soft grains), the housing market hit a top, and consumers' short-term optimism retreated," he added.

"The inflation debate is not over, but the majority of Wall Street believes it will be transitory."

Still, investor optimism continues to be kept in check by worries about a spike in infections around Asia's top economies including, among others, India, Japan, Taiwan, Singapore and Thailand, with vaccination rates also worryingly low.

Bitcoin bounced back above $40,000 after a bout of recent volatility, fuelled by China's warning of a crackdown on cryptocurrency use and mining and various tweets by tycoon Elon Musk.

The digital unit at one point last week almost fell below $30,000 for the first time since January before rebounding in recent days.

But it remains well below its record high close to $65,000 touched just over a month ago.

- Key figures around 0810 GMT -

Tokyo - Nikkei 225: UP 0.3 percent at 28,642.19 (close)

Hong Kong - Hang Seng Index: UP 0.9 percent at 29,166.01 (close)

Shanghai - Composite: UP 0.3 percent at 3,593.36 (close)

London - FTSE 100: UP 0.2 percent at 7,042.34

Euro/dollar: DOWN at $1.2243 from $1.2253 at 2130 GMT

Pound/dollar: DOWN at $1.4142 from $1.4151

Euro/pound: DOWN at 86.56 pence from 86.59 pence

Dollar/yen: UP at 108.84 from 108.76 yen

West Texas Intermediate: UP 0.4 percent at $66.33 per barrel

Brent North Sea crude: UP 0.6 percent at $69.07 per barrel

New York - Dow: DOWN 0.2 percent at 34,312.46 (close)

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Asian markets rally as inflation fears ease
Hong Kong (AFP) May 25, 2021
Easing inflation concerns helped push equities higher in Asia on Tuesday, tracking a healthy rally on Wall Street, with traders taking heart from the global economic recovery outlook. Bitcoin also held gains after another wild day, thanks to a supportive tweet from tycoon Elon Musk that offset fresh Chinese warnings of a crackdown on cryptocurrencies. Tech firms led the way higher in New York as investors took heart from a number of Federal Reserve officials who insisted that an expected spike i ... read more