SYDNEY (Reuters) – Stock markets mixed on Monday as the US Senate’s $ 1.9 trillion stimulus bill bode well for faster global economic growth, but also put a new pressure on the Treasury and technological actions with high ratings.
Optimistic economic news continued as China’s exports rose 155 percent in February from a year earlier, when much of the economy closed to fight the coronavirus.
“With the passage of the Senate, we expect growth momentum to accelerate and forecast global GDP growth to grow at an annualized rate of 7.5% in the average quarters of the year,” JPMorgan economists said in a statement.
“Each $ 1 trillion tax incentive adds about $ 4-5 to EPS, which means a 6-7% increase for the rest of the year.”
However, analysts also expected a sharp acceleration in inflation, driven in part by the recent rise in oil prices, which led to rising bond yields and broadening stock valuations, especially in the high-tech area.
That caused Nasdaq futures to reverse early gains to fall 1.0%, pulling S&P 500 futures down 0.2%.
The largest MSCI index of Asia-Pacific equities outside Japan followed a 0.5% decline, while Chinese chips fell 0.9%.
Nikkei in Japan clung to a gain of 0.2%, while EUROSTOXX 50 futures rose another 0.8% and FTSE futures 0.9 %%.
Equity investors took heart from US data showing non-farm payrolls rose 379,000 jobs last month, while the unemployment rate fell to 6.2% in a positive sign for corporate income, spending and earnings.
US Treasury Secretary Janet Yellen tried to counter inflation concerns, noting that the real unemployment rate was approaching 10% and that there was still a lot of weakness in the labor market.
However, 10-year US Treasury yields reached a one-year high of 1.625% as a result of the data and stood at 1.59% on Monday. Yields rose 16 basis points for the week, while German yields fell 4 basis points.
The European Central Bank is meeting on Thursday amid talks that it will protest against the recent rise in eurozone yields and may look at ways to halt further growth.
The divergent trajectory of yields stimulated the dollar against the euro, which fell to a three-month low of $ 1.1892 and was last set at $ 1.1904.
BofA analyst Athanasios Vamvakidis argued that the strong mix of US stimulus, faster reopening and higher firepower for consumers was a clear positive for the dollar.
“Including the current proposed stimulus package and an addition to an infrastructure bill in the second half, total US fiscal support is six times higher than the EU’s recovery fund,” he said. “The Fed also supports the growth of the US money supply twice as fast as the euro area.”
The dollar index rose accordingly to unprecedented levels since the end of November and was last at 92,057, well above its last low of 89,677.
It also won the low-yielding yen, hitting a nine-month high of 108.63 and changing hands last time at 108.41.
The yield jump weighed on gold, which offers no fixed return, and left it at $ 1,705 an ounce and even over the nine-month low.
Oil prices have risen to their highest levels in more than a year after Yemen’s Houthi forces launched drones and missiles into the heart of Saudi Arabia’s oil industry on Sunday, raising concerns about production.
Prices had already been supported by a decision by OPEC and its allies not to increase supply in April. [O/R]
Brent rose $ 1.44 a barrel to $ 70.80, while US crude rose $ 1.36 to $ 67.45 a barrel.
Reporting by Wayne Cole; Mountain by Sam Holmes