LONDON / TOKYO (Reuters) – Global equities hit Wednesday, with European indices reflecting positive movements in Asia, as a downturn in U.S. Treasury yields fueled demand for riskier assets and weakened the dollar.
The Euro STOXX 600 added 0.7%, with Frankfurt shares rising 0.9% to a record high and the London FTSE adding 1.3% before the UK new budget was introduced, with measures to boost the economy promote.
Car manufacturers led the profit and added up to 2.6% to reach the highest since June 2018.
MSCI’s largest Asia-Pacific equities index outside Japan rose 1.7%, led by equities in China.
E-mini S&P futures rose 0.6%.
Earnings for equities came as US government bond yields continued to stabilize following last month’s sell-off.
The yield on 10-year treasury notes was 1.41%, down from an annual high of 1.61% from last week, before a bunch of US economic data sets were released later this week. Bond yields rise when prices fall.
Rising revenues around the world, fueled by shifts in the treasury, have plagued financial markets over the past few weeks. Investors are betting on a strong economic downturn in the US amid ultra-loose monetary conditions that will fuel inflation.
Still, optimism that the more looming U.S. stimulus will drive global economic recovery, with U.S. President Joe Biden close to a $ 1.9 billion spending package.
“We are caught in the middle of this crossfire between a more positive macro situation and some redundancies that have developed here and there,” said Olivier Marciot, senior portfolio manager at Unigestion.
“The market is reassessing the situation as to whether it (stock market gains) was too high and too fast.”
Wall Street ended lower on Tuesday, which was pulled down by Apple and Tesla as fears of too high valuations lingered.
The MSCI World Equities Index, which tracks equities in 49 countries, rose 0.4%.
SAFE PRICES?
Some analysts have continued to warn that stock prices could be frothy – a fear echoed by a Chinese government official on Tuesday – making it difficult to reach stock markets as a result.
Fears that the sell-off of the US treasury, which left the stock markets, could resume last week could also put a lid on stock prices.
“While markets have stabilized …, the tone remains low as investors remain apprehensive of a further sell-off in rates,” TD Securities analysts said in a note.
The cautious mood hurt the US dollar. It has earned over the past few days through investors’ hopes that the United States would enjoy a faster economic recovery and that the US Federal Reserve would yield higher bonds.
The dollar’s index against six of its major peers changed at 90,787 min after falling overnight from a near-one-month high.
The Australian dollar, which benefited from bets on an acceleration in world trade, rose 0.1% to $ 0.7820 as stronger-than-expected economic growth in the fourth quarter raised hopes of a V-shaped triggered recovery from the coronavirus pandemic.
Oil prices rose as signs of progress in rolling out COVID-19 vaccine in the United States, the world’s largest consumer, raised expectations of demand.
U.S. West Texas Intermediate crude rose 0.4% to $ 59.99 a barrel. Brent futures rose the same amount to $ 62.96. [O/R]
Reporting by Tom Wilson in London and Stanley White in Tokyo; Edited by Christopher Cushing, Christian Schmollinger, Larry King