LONDON v TOKYO (Reuters) – Global equities gained on Wednesday, with European indices echoing positive moves in Asia, as a decline in US 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 up 1.3% before the introduction of the new UK budget, with measures to stimulate the economy.
Car manufacturers led the gains, adding up to 2.6% to reach the June 2018 high.
The largest MSCI index of Asia-Pacific equities outside Japan rose 1.7%, led by equities in China.
E-mini S&P futures rose 0.6%.
Earnings for shares came as benchmark US government bond yields continued to stabilize after last month’s sell-off.
The yield on 10-year treasury bills stood at 1.41%, down from last week’s one-year high of 1.61%, before a series of US economic data was released later this week. . Bond yields rise as prices fall.
Growing yields around the world, fueled by Treasury movements, have affected financial markets in recent weeks. Investors have bet on a strong US economic recovery amid ultra-weak monetary conditions that would fuel inflation.
However, optimism that a more imminent US stimulus will energize the global economic recovery has boosted stocks, with US President Joe Biden about to pass a $ 1.9 trillion spending package.
“We are caught in the middle of this cross between a more positive macro situation and some excesses that have developed here and there,” said Olivier Marciot, senior portfolio manager at Unigestion.
“The market is reassessing the situation as if (stock market gains) were too high or not too fast.”
Wall Street had ended on Tuesday, downgraded by Apple and Tesla, while fears of overvaluations persisted.
The MSCI Global Capital Index, which tracks stocks in 49 countries, gained 0.4%.
FROTHY PRICES?
Some analysts have continued to warn that stock prices could be frothy – a fear repeated by a Chinese regulator on Tuesday – and as a result make stock markets more difficult to cling to gains.
Fears that last week’s sale in the US Treasury, which shook the stock markets, could resume could also cover stock prices, they said.
“While markets have stabilized … the tone remains weak as investors continue to fear further selling rates,” analysts at TD Securities said in a note.
The cautious mood weighed on the US dollar. In recent days, it has gained from investor hope that the United States will enjoy a faster economic recovery and that the US central bank will tolerate higher bond yields.
A dollar index against six of his most important colleagues was slightly changed to 90,787, after falling from a high of almost a month overnight.
The Australian dollar, which benefited from betting on an acceleration in world trade, rose 0.1% to $ 0.7820 as stronger-than-expected economic growth in the fourth quarter fueled hopes of a recovery in the form of V after the coronavirus pandemic.
Oil prices have risen as signs of progress in launching the COVID-19 vaccine in the United States, the world’s largest consumer, have raised demand expectations.
The US West Texas Intermediate Truce rose 0.4% to $ 59.99 a barrel. In the long run, Brent rose $ 62.96. [O/R]
Reporting by Tom Wilson in London and Stanley White in Tokyo; edited by Christopher Cushing, Christian Schmollinger, Larry King