GLOBAL MARKETS-Global stocks slide as bond and commodity yields rise


* European stocks plunge

* Wall Street futures down 0.85%

* Chart: Global Asset Performance tmsnrt.rs/2yaDPgn

* Chart: World Exchange Rates tmsnrt.rs/2egbfVh

LONDON, Feb 22 (Reuters) – Global stocks plunged on Monday as expectations of faster economic growth and inflation hit bonds and boosted commodities, while rising real yields sent valuations of the stocks seem more stretched in comparison.

MSCI’s All Country World Index, which tracks stocks in 49 countries, was down 0.25% at noon in London.

The pan-European STOXX 600 Index was down 0.6%, reaching its lowest level in 10 days. Germany’s DAX, France’s CAC 40 and Great Britain’s FTSE 100 each fell 0.5%. The IBEX 35 index in Spain and the FTSE MIB in Italy lost 0.6% each.

S&P 500 futures fell to their lowest level since Feb. 5, down 0.85% on the day.

Bonds have been hit by the prospect of a stronger economic recovery and higher indebtedness as President Joe Biden’s $ 1.9 trillion stimulus package proceeds.

Federal Reserve Chairman Jerome Powell delivers his semi-annual testimony to Congress this week and is likely to reiterate a commitment to keeping the policy very easy for as long as it takes to boost inflation.

“Next week is relatively low on the international data agenda, but after the recent surge in long bond yields, Fed Chairman Powell hearings in both houses of Congress (Tuesday / Wednesday) will be drawing a great interest, “said Elisabet Kopelman, an American economist. in SEB.

“The fact that the most recent rise in long-term bond yields was driven by higher real interest rates and not just inflation expectations increases the likelihood of a dovish message.”

The president of the European Central Bank, Christine Lagarde, is also expected to sound dovish in a speech Monday.

Yields on 10-year Treasury notes have already reached 1.38%, breaking the 1.30% level and taking the year-to-date rise to 43 basis points.

BofA analysts noted that the 30-year bonds had returned -9.4% so far this year, the worst start since 2013.

“Real assets are outpacing financial assets in ’21 as cyclical, political and secular trends indicate higher inflation,” analysts said in a note. “Booming commodities, lagging energy in vogue, materials in secular ruptures.”

In early Asia, MSCI’s broader Asia-Pacific equity index outside of Japan fell 1.18%, after falling from an all-time high last week when the jump in U.S. bond yields unsettled investors. investors.

Japan’s Nikkei rebounded 0.8% and South Korea’s 0.1%, but Chinese blue chips lost 1.4%.

A COPPER-DASHED RECOVERY One of the stars has been copper, a key component of renewable technology, which soared 7.7% last week to a nine-year high. The broader base metals index LMEX was up 5.5% on the week.

Oil prices have followed suit, helped by tight supplies and freezing weather, giving Brent a 22% gain so far this year.

On Monday, Brent crude futures were up 0.7% at $ 63.33 a barrel. US crude added 0.7% to $ 59.65.

All of that has been a boon for commodity currencies, with Canadian, Australian and New Zealand dollars the highest so far this year.

Sterling hit a three-year high of $ 1,4050, helped by one of the fastest vaccine launches in the world. England will ease lockdown restrictions at five-week intervals, Sky News reported Monday, hours before Prime Minister Boris Johnson announced the details of his roadmap for reopening the country.

The US dollar index has remained relatively in range, with downward pressure from the country’s growing twin deficits balanced by higher bond yields. The latest index came in at 90,342, not far from where the year started at 90,260.

Rising Treasury yields have helped the dollar rise against the yen to 105.60, as the Bank of Japan is actively restricting yields at home.

The euro was stable at $ 1.2135, cornered between support at $ 1.2021 and resistance around $ 1.2169.

One staple that isn’t doing so well is gold, partly due to rising bond yields and partly because investors wonder if cryptocurrencies could be a better hedge against inflation.

Gold stood at $ 1,795 an ounce, having started the year at $ 1,896. Bitcoin was down 5.8% on Monday to $ 54,127, down from a record high of $ 58,354.

Report by Ritvik Carvalho; additional reports from Wayne Cole in Sydney; Larry King edition

.

Source link