NEW YORK (Reuters) – A gauge of global equities was on track on Tuesday for the largest one-day percentage gain in a week, as a drop in U.S. Treasury yields allayed concerns that the economic recovery could overheat and lead to stronger than expected inflation.
US Treasury yields fell in view of the $ 120 billion 3-, 10- and 30-year Treasury auctions this week as a weak 7-year bond sale that spiked yields two weeks ago followed by another soft auction week.
Benchmark 10-year notes last rose 10/32 to return 1.5594% from 1.594% late Monday. The note has risen above 1.6% three times since Feb. 25, reaching levels not seen in more than a year.
On Wall Street, each of the major averages was higher, led by a gain of more than 3% in the Nasdaq, putting the tech-heavy index on track for its largest one-day percentage gain in just over four months. The index has been very sensitive to rates of increase, and Monday’s pull-back was down more than 10% from the February 12 close, confirming what is widely considered a correction.
“It’s the tail that wags the dog; Interestingly, the focus has really shifted to the impact of extremely aggressive tax spending on the likelihood that inflationary pressures will once again become a mainstay of the investment landscape, ”said Peter Kenny, founder of Kenny’s Commentary LLC and Strategic Board Solutions LLC in Denver.
“This is an expected, very predictable and, dare I say, welcome response, and it’s all about speed.”
The Dow Jones Industrial Average rose 263.57 points, or 0.83%, to 32,066.01, the S&P 500 gained 66.58 points or 1.74% to 3,887.93 and the Nasdaq Composite 394.01 points, or 3 , 12%, to 13,003.18.
In Europe, a fall in interest rates helped stocks of data showing a larger-than-expected decline in the Eurozone’s economic output in the fourth quarter, although gains were less pronounced than in the United States, after European stocks dropped by more on Tuesday. than 2% had risen.
Investors will also be watching a meeting of the European Central Bank later this week to see if policymakers have decided to increase the pace of emergency bond purchases to appease shy markets.
Tuesday’s data showed that the ECB barely increased its emergency bond purchases last week, even before subtracting debt maturing during that period, raising new questions about central banks’ decision to curb a bond market sell-off.
The pan-European STOXX 600 index rose 0.72% and the MSCI index of stocks around the world rose 1.48%.
The faster rollout of COVID-19 vaccines in some countries and the planned $ 1.9 trillion stimulus package from the United States helped support an improved global economic outlook, said the Organization for Economic Co-operation and Development (OECD), which announced its growth forecast for 2021 increased to 5.6%.
Germany’s 10-year government bond yield last rose 6/32 in price to -0.298%, from -0.278% on Monday, moving further away from the nearly one-year high of -0.203% in late February.
In the currency markets, the dollar index pulled back from a 3-1 / 2 month high, allowing riskier currencies such as the Aussie and Kiwi dollar to move higher.
The dollar index fell by 0.312% and the euro by 0.34% to $ 1.1883.
Oil prices bounced back on previous spikes in turbulent trading, with Brent dropping to $ 68 as investors weighed concerns about a supply interruption in Saudi Arabia against the likelihood of a limited supply of OPEC + output limits.
US crude oil recently fell 0.57% to $ 64.68 a barrel and Brent was down 0.18% from a day ago.
Reporting by Chuck Mikolajczak; edited by Jonathan Oatis