LONDON (Reuters) – Global equities fell from record highs as caution on rising coronavirus cases saw some investor gains, while Treasury yields remained close to 10-month highs, indicating expectations for global reflection from the US anticipated fiscal stimulus.
According to Reuters, the number of coronavirus cases worldwide has exceeded 90 million months.
European stocks fell in early trading, with the number of coronavirus cases on the mainland rising, and China falling its stockpiles of goods. Germany’s DAX lost 0.75%, Britain’s FTSE 100, Italy’s FTSE MIB and France’s CAC 40 fell about half a percent each, and Spain’s IBEX fell 0.1%.[.EU]
With Asian stock markets also lower, the MSCI All Country World index, which tracks shares in 49 countries, fell 0.2%, just off Friday’s record high.
S&P 500 futures fell 0.6% from record highs, after gaining 1.8% last week. EUROSTOXX 50 futures fell 0.1% and FTSE futures were flat.
“There was terrible optimism about the stimulus outlook, with the Biden administration winning both seats in the Georgian Senate,” said Michael Hewson, chief market analyst at CMC Markets in London, citing records on Friday.
“Friday’s salary report was disappointing, stressing the need for a more meaningful fiscal response. But as we move into the second week (of the new year), I think some of this optimism has tempered slightly with profit. “
In Asia, the largest MSCI index of Asia-Pacific equities outside Japan fell 0.1%, after rising 5% last week to record highs. The Japanese Nikkei was on vacation after closing on Friday at a maximum of 30 years.
South Korea reversed an early jump to fall 0.1%, and Chinese chips fell 1%.
Last week, Wall Street bankers warned of toppy stock markets and an approaching retreat after exuberance from an unprecedented economic stimulus led to “frothy” asset prices.
“I think there’s a perception that markets are probably getting ahead of them,” Hewson said.
Mark Haefele, chief investment officer at UBS Global Wealth Management, said in a note to clients that he did not see valuations as a barrier to the capital rally continuing, “especially amid continued political stimulus and vaccine launches. “
Longer-term Treasury yields have been the highest since March, after Friday’s weak job report supported speculation about more US fiscal incentives, now that Democrats have control over the government.
President-elect Joe Biden is set to announce plans for “trillions” in new exemption bills this week, many of which will be repaid by increasing loans.
At the same time, the Federal Reserve is pleased to be tasked with fiscal policy. Vice President Richard Clarida said there would be no change soon on the $ 120 billion debt the Fed buys each month.
With the Fed reluctant to buy older bonds, the 10-year Treasury yields rose last week by nearly 20 basis points to 1.12%, the highest weekly increase since June.
Treasury futures lost another 3 ticks months early.
BofA’s Mark Cabana warned that the stimulus could put additional pressure on the dollar and could lead to a reduction in the Fed’s downturn later this year.
“An early Fed cut creates positive risks for our 1.5% year-over-year treasury target and supports our longer-term expectations for 3% neutral rates,” he said in a note to clients. .
The weak wage report will increase interest in US inflation, retail and consumer sentiment data.
Earnings will also be in the spotlight, as JP Morgan, Citigroup and Wells Fargo are among the first companies to release fourth-quarter results on January 15th.
Yield growth, in turn, provided some support for the dollar, which rose to 90.338 against a basket of currencies from last week’s low of 89,206.
The euro retreated to $ 1.2185 from a recent high of $ 1.2349, breaking support at around $ 1.2190. The dollar also gained to 104.18 yen from a 102.57 trough hit last week.
The sharp rise in bonds undermines gold, which pays no interest and fell 1.1 percent to $ 1,828 an ounce from its last high of $ 1,959. [GOL/]
Oil prices faced gains after hitting a one-year high on Friday, gaining 8% the following week after Saudi Arabia pledged to cut production. [O/R]
In the long run, gross brent fell 0.7% to $ 55.56. Gross US futures lost 0.3% to $ 52.10 a barrel.
Reporting by Ritvik Carvalho; additional reporting by Wayne Cole in Sydney; edited by Larry King