LONDEN / SYDNEY (Reuters) – World equities rose on Tuesday, supported by stronger US stock futures and a decline in US and European bond yields.
In Europe, the Euro STOXX 600 rose 0.1% after a rise on Monday that lifted Germany’s index to a record high.
In volatile trading in Asia, the Shanghai Composite Index fell 1.8% to close a multi-year high on 18 February amid fears of policy tightening. The Japanese Nikkei ended 1% higher as consumer goods and real estate developers were expected to benefit from an economic recovery.
“We are going through a consolidation phase,” said Francois Savary, chief investment officer at Prime Partners. ‘There is a tendency for a rotation in the market, which is correct because the price-to-earnings ratio was excessive. But overall, we think we will have a more balanced stock market than 2020, although volatility will remain with us. ‘
NASDAQ futures rose 1.6% and S&P 500 futures rose 0.8%.
US Treasury Secretary Janet Yellen said on Monday that President Joe Biden’s aid package for coronavirus would provide enough resources to fuel a ‘very strong’ economic recovery in the US, noting that there are ‘tools’ to deal with inflation.
Investors continue to clash over whether the stimulus will help accelerate global growth due to the COVID-19 downturn or cause the world’s largest economy to overheat and fuel inflation.
“The chances of us seeing more inflation in the economy are significantly increased by the monetary and fiscal policies we see worldwide,” Goldman Sachs CEO David Solomon told a news conference in Sydney via a webcast said.
“There is definitely a reasonable outcome where inflation is accelerating faster than people expect, and that will obviously have an impact on the markets and volatility.”
The technology sector and other rich companies were very susceptible to the rising rates.
Australian equities followed overnight gains on Wall Street, with the major S & P / ASX 200 index rising 0.5% on Tuesday. However, Australian technology stocks slipped for the sixth consecutive session, in line with their US counterparts.
Similarly, South Korea’s KOSPI fell 0.7% and fell for a fourth straight session as it sold technological shares.
US economic data indicates a continued recovery. Trading stocks rose in January despite an increase in sales, the Department of Commerce said Monday, suggesting that investments in the stock could once again contribute to growth in the first quarter.
“If rates rise because people are optimistic about economic growth, it is still supportive of stock prices,” said Tom Hainlin, a global investment strategist at US Bank Wealth Management’s Ascent Private Wealth Group in Minneapolis.
Yields on long-term government bonds in the eurozone fell ahead of the announcement of the final gross domestic data at 1000 GMT for the bloc. A Reuters poll predicted that the region’s economy had shrunk by 5% from a year earlier.
Germany’s 10-year yield on government bonds fell by two basis points to -0.298%.
U.S. yields for ten-year treasury bonds also declined to 1.5472%. Treasury yields have risen over the past few months as investors price higher inflation and better prospects for the US economy.
In foreign exchange markets, the dollar index fell from a three-and-a-half-month high. The text is that the appetite is returning, but the Aussie and the Kiwi dollar are stronger. The euro rose 0.1% to $ 1,185.
Oil prices fell on Tuesday due to fears of an interruption in supply in Saudi Arabia following an attack on its export facilities.
Brent crude futures for May fell 0.7% to $ 67.78 a barrel. U.S. West Texas Intermediate (WTI) crude for April fell 0.8 percent to $ 65.53.
Spot gold added 0.7% to $ 1,692.21 per ounce.
Additional reporting by Matt Scuffham in New York; Edited by Christian Schmollinger, Jacqueline Wong, Larry King