* European shares sink
* Wall Street futures fall 0.85%
* Graphical: Global asset performance tmsnrt.rs/2yaDPgn
* Graphically: World FX rates tmsnrt.rs/2egbfVh
LONDON, Feb. 22 (Reuters) – World equities sank on Monday as expectations of faster economic growth and inflation slumped securities and strengthened commodities, while rising real returns made equities look better in comparison.
MSCI’s All Country World Index, which tracks equities in 49 countries, fell 0.25% at lunch in London.
The pan-European STOXX 600 index fell 0.6% to its lowest in ten days. The DAX in Germany and the CAC 40 in France and the FTSE 100 in Britain each fell by 0.5%. The Spanish IBEX 35 index and the FTSE MIB of Italy each lost 0.6%.
S&P 500 futures have fallen to their lowest since February 5, up 0.85% on the day.
Bonds have been crushed by the prospect of a stronger economic recovery and larger loans as President Joe Biden’s $ 1.9 billion stimulus package progresses.
Federal Reserve Chairman Jerome Powell is giving his biannual testimony before Congress this week and is likely to repeat a commitment to keep policies as easy for as long as necessary to increase inflation.
“The coming week is relatively thin on the international data agenda, but after the recent rise in long-term bond yields, Fed Chairman Powell’s hearings in both houses of Congress (Tuesday / Wednesday) will be of great interest. attracts, “said Elisabet Kopelman, US economist, at BEE.
“The fact that the most recent rise in long-term bond yields is driven by higher real interest rates and not just inflation expectations increases the likelihood of a pigeon message.”
European Central Bank President Christine Lagarde is also expected to speak in a speech later Monday.
The yield on 10-year treasury notes has already reached 1.38%, breaking the 1.30% level and bringing the rise for the year so far to a steep 43 basis points.
Analysts from BofA noted that 30-year bonds have had -9.4% returns so far this year, the worst start since 2013.
“Real assets outperform financial assets in ’21, as cyclical, political, secular trends suggest higher inflation,” analysts said in a note. “The yield of commodities, backward energy in fashion, material in secular interruptions.”
Earlier in Asia, MSCI’s broadest index of Asia-Pacific stocks outside Japan fell 1.18% after declining from a record high last week as the rise in U.S. bond yields yielded uninhibited investors.
Japan’s Nikkei recovered 0.8% and South Korea 0.1%, but Chinese blue chips lost 1.4%.
A COPY SECTION RESTORED One of the stars was copper, a key component of renewable technology, which soared 7.7% to a nine-year high last week. The broader LMEX base metal index climbed 5.5% this week.
Oil prices went through the ride, aided by the tightening of inventory and icy weather, which Brent profit has achieved by 22% so far this year.
Brent crude futures rose 0.7% on Monday to $ 63.33 a barrel. US crude added 0.7% to $ 59.65.
All of this has been a boon for commodity-linked currencies, with the Canadian, Australian and New Zealand dollars higher so far for the year.
Sterling achieved a top year of $ 1.4050, helped by one of the fastest explosions in the world. England will ease the closure restrictions at five-week intervals, Sky News reported on Monday, hours before Prime Minister Boris Johnson has to announce the details of his roadmap for reopening the country.
The US dollar index was relatively volatile, with the downward pressure on the country’s growing twin deficits offset by higher bond yields. The index was last at 90,342, not far from where it started the year at 90,260.
Rising Treasury yields helped the dollar rise against the yen to 105.60 as the Bank of Japan actively restrained home yields.
The euro was stable at $ 1.2135, linked to support at $ 1.2021 and resistance at $ 1.2169.
One commodity that is not doing so well is gold, partly due to rising returns, and partly because investors are asking whether cryptocurrencies could be a better hedge against inflation.
Gold was $ 1,795 per ounce, starting the year at $ 1,896. Bitcoin was 5.8% lower on Monday at $ 54,127, at a record high of $ 58,354.
Reporting by Ritvik Carvalho; additional reporting by Wayne Cole in Sydney; Edited by Larry King