LONDON / SYDNEY (Reuters) – Global stocks stabilized on Tuesday, supported by stronger US equity futures and a drop in US and European bond yields.
In Europe, the Euro STOXX 600 rose 0.1% after Monday’s gains that pushed Germany’s index to an all-time high.
In volatile trading in Asia, the Shanghai Composite Index fell 1.8% and came close to a correction from a multi-year high on February 18 amid tightening policy fears. Japan’s Nikkei finished 1% higher as consumer goods companies and property developers won on expectations that they would benefit from an economic recovery.
“We are going through a consolidation phase,” said Francois Savary, chief investment officer at Prime Partners. “There is a tendency towards a rotation in the market, which is correct since the price-earnings ratios were excessive. But overall, we believe that we will have a more balanced equity market than in 2020, although volatility will stay with us. “
NASDAQ futures were up 1.6% and S&P 500 futures 0.8%.
US Treasury Secretary Janet Yellen said Monday that President Joe Biden’s coronavirus aid package would provide sufficient resources to drive a “very strong” US economic recovery, noting that “there are tools” to cope. to inflation.
Still, investors remain in conflict over whether the stimulus will help global growth recover more quickly from the COVID-19 recession or cause the world’s largest economy to overheat and fuel inflation.
“The possibility that we will see more inflation in the economy is significantly increased by the monetary policy actions and the fiscal policy actions that we are seeing around the world,” Goldman Sachs CEO David Solomon said at a conference in Sydney. via webcast.
“There is certainly a reasonable outcome where inflation accelerates faster than people expect, and that will obviously have an impact on markets and volatility.”
The tech sector and other high-value companies have been highly susceptible to rate hikes.
Australian stocks posted overnight gains on Wall Street with the leading S & P / ASX 200 index rising 0.5% on Tuesday. However, Australian tech stocks fell for the sixth straight session, in line with their US peers.
Similarly, South Korea’s KOSPI fell 0.7%, falling for the fourth consecutive session, as tech stocks sold off.
Economic data from the United States pointed to a continued recovery. Wholesale inventories rose in January despite an increase in sales, the Commerce Department said on Monday, suggesting that inventory investment could again contribute to growth in the first quarter.
“If rates are going up because people are getting optimistic about what economic growth looks like, that continues to support equity prices,” said Tom Hainlin, global investment strategist at US Bank Wealth Management’s Ascent Private Wealth Group at Minneapolis.
Long-term euro zone government bond yields fell ahead of the 1000 GMT release of the bloc’s final gross domestic data. A Reuters poll forecast that the region’s economy contracted 5% from a year earlier.
The yield on Germany’s 10-year government debt fell two basis points to -0.298%.
Yields on 10-year US Treasuries also declined, down to 1.5472%. Treasury yields have advanced in recent months as investors trade in higher inflation and more optimistic outlook for the US economy.
In currency markets, the dollar index fell from a three-and-a-half-month high. In signs that risk appetite is returning, the British pound, the Australian dollar and the kiwi dollar rose. The euro was up 0.1% at $ 1.185.
Oil prices fell on Tuesday, as fears of a supply disruption in Saudi Arabia receded after an attack on its export facilities.
May Brent crude futures fell 0.7% to $ 67.78 a barrel. US West Texas Intermediate (WTI) crude for April fell 0.8% to $ 65.53.
Spot gold added 0.7% to $ 1,692.21 an ounce.
Additional reporting from Matt Scuffham in New York; edited by Christian Schmollinger, Jacqueline Wong, Larry King