LONDON v SYDNEY (Reuters) – Global equities stabilized on Tuesday, supported by stronger US futures and a decline in US and European bond yields.
In Europe, the Euro STOXX 600 rose 0.1% after a rise on Monday, which raised Germany’s index to a record high.
In volatile Asian transactions, the Shanghai Composite Index fell 1.8% and was close to a multi-year high on February 18 amid fears of a tightening policy. Japan’s Nikkei finished 1% higher, as consumer goods companies and real estate developers won on expectations that they will benefit from an economic recovery.
“We are going through a consolidation phase,” said Francois Savary, chief investment officer at Prime Partners. “There is a trend towards a market rotation, which is correct, because the price-earnings ratios have been excessive. But overall, we believe we will have a more balanced capital market than 2020, although volatility will remain with us. ”
NASDAQ futures rose 1.6% and S&P 500 futures 0.8%.
U.S. Treasury Secretary Janet Yellen said Monday that President Joe Biden’s coronavirus aid package will provide sufficient resources to fuel a “very strong” economic recovery in the United States and said “there are tools” to deal with inflation.
However, investors remain conflicted as to whether the stimulus will help global growth return faster due to the COVID-19 recession or cause the world’s largest economy to overheat and fuel inflation.
“The chance of seeing more inflation in the economy is significantly increased by the monetary and fiscal policy actions we see around the world,” Goldman Sachs chief executive David Solomon told a conference in Sydney. via webcast.
“There is certainly a reasonable outcome where inflation is accelerating faster than people expect, and this will obviously have an impact on markets and volatility.”
The technology sector and other highly regarded companies have been extremely sensitive to rising rates.
Australian equities followed overnight gains on Wall Street, with the S & P / ASX 200 main index rising 0.5% on Tuesday. However, Australian technology stocks fell for the sixth straight session, according to their US counterparts.
Similarly, KOSPI in South Korea fell 0.7%, falling for the fourth consecutive session, as technology stocks sold out.
US economic data indicated a steady recovery. Wholesale stocks rose in January, despite rising sales, the Commerce Department said Monday, suggesting that investment in stocks could again contribute to growth in the first quarter.
“If rates rise more and more as people become optimistic about growth, it continues to support stock prices,” said Tom Hainlin, global investment strategist at Ascent Private Wealth Group in Bank Wealth Management. from Minneapolis.
Outstanding eurozone government bond yields declined before the final gross domestic data for the bloc were released at 1000 GMT. A Reuters poll estimated that the region’s economy contracted by 5% from a year earlier.
Germany’s 10-year government bond yield fell two basis points to -0.298%.
10-year yields on US treasury bonds also fell to 1.5472%. Treasury yields have advanced in recent months as investors have priced higher inflation and more optimistic outlooks for the US economy.
In foreign exchange markets, the dollar index retreated from a three-and-a-half-month high. In the signs, the risk appetite is returning, the pound sterling, the Australian and the Kiwi dollar have risen. The euro rose 0.1% to $ 1,185.
Oil prices fell on Tuesday due to fears of a supply cut in Saudi Arabia following an attack on its export facilities.
In May, Brent crude futures fell 0.7 percent to $ 67.78 a barrel. West Texas Intermediate (WTI) gross product for April fell 0.8% to $ 65.53.
Spot gold added 0.7% to $ 1,692.21 per ounce.
Additional reporting by Matt Scuffham in New York; montage by Christian Schmollinger, Jacqueline Wong, Larry King