LONDON / TOKYO (Reuters) – Global equities rallied Wednesday, with European indices showing positive moves in Asia, while a drop 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 London’s FTSE adding 1.3% before the UK’s new budget was introduced, with measures to boost the economy. give it a boost.
Automakers led the profit, adding a whopping 2.6% to hit their highest level since June 2018.
MSCI’s widest index of Asia-Pacific stocks outside Japan rose 1.7%, led by stocks in China.
E-mini S&P futures were up 0.6%.
The rise for equities came as yields on US benchmark government bonds continued to stabilize after last month’s sell-off.
The 10-year Treasury yield was 1.41%, down from last week’s high of 1.61% before a slew of US economic data was due to be released later this week. Bond yields rise when prices fall.
Rising yields around the world, fueled by movements in government bonds, have plagued financial markets in recent weeks. Investors bet that a strong US economic recovery amid very loose monetary conditions would fuel inflation.
Still, optimism that a more imminent US stimulus will spur the global economic recovery has boosted equities, with US President Joe Biden nearly passing a $ 1.9 trillion spending package.
“We are in the middle of this crossfire 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 these (stock market gains) had been too high and too fast.”
Wall Street had ended lower on Tuesday, dragged down by Apple and Tesla as fears of overvaluation lingered.
The MSCI world stock index, which tracks stocks in 49 countries, gained 0.4%.
FROTHY PRICES?
Some analysts have continued to warn that stock prices may be frothy – a fear echoed by a leading Chinese regulatory official on Tuesday – making it difficult for stock markets to hold on to gains.
Fears that last week’s sell-off of US Treasuries that upset stock markets could resume could also weigh on stock prices, they said.
“While the markets have stabilized … the tone remains weak as investors continue to fear a further sell-off in interest rates,” TD Securities analysts said in a note.
The cautious mood weighed on the US dollar. In recent days, it had won over investors’ hopes that the United States would enjoy a faster economic recovery and that the US central bank would tolerate higher bond yields.
An index of the dollar against six of its major counterparts had changed little at 90,787 after falling overnight from a month high.
The Australian dollar, which has benefited from bets on an acceleration in world trade, rose 0.1% to $ 0.7820 as stronger-than-expected economic growth in the fourth quarter sparked hopes of a V-shaped recovery from the coronavirus pandemic increase.
Oil prices soared as signs of progress in the introduction of the COVID-19 vaccine in the United States, the world’s largest consumer, boosted demand expectations.
US West Texas Intermediate crude oil was up 0.4% to $ 59.99 a barrel. Brent futures were up the same amount to $ 62.96. [O/R]
Reporting by Tom Wilson in London and Stanley White in Tokyo; edited by Christopher Cushing, Christian Schmollinger, Larry King