LONDON / TOKYO (Reuters) – Global equities gained on Wednesday, with European indices echoing positive movements in Asia, as a decline in U.S. Treasury yields fueled demand for riskier assets and weakened the dollar.
Euro STOXX 600 amounted to 0.7%, with Frankfurt shares rising 0.9% to a record high and London’s FTSE rising 1.3% before the introduction of the new UK budget, with measures to boost the economy.
The automakers led the gains, adding up to 2.6% to reach the highest value since June 2018.
MSCI’s broader Asia-Pacific stock index outside Japan rose 1.7%, led by China’s stocks.
E-mini S&P futures rose 0.6%.
The gains for the shares came as US government bond yields continued to stabilize after last month’s liquidation.
Yield on 10-year Treasury bills stood at 1.41%, down from last week’s year-on-year high of 1.61%, before a series of US economic data set for release later this week. Bond yields increase when prices fall.
The rise in yields around the world, fueled by movements in Treasury bills, has affected financial markets in recent weeks. Investors were betting that a strong economic recovery in the United States amidst ultra-peripheral monetary conditions would fuel inflation.
Still, optimism that a more imminent US stimulus will energize the global economic recovery has boosted inventories, with US President Joe Biden close to approving 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 been developing here and there,” said Olivier Marciot, senior portfolio manager at Unigestion.
“The market is reevaluating the situation to see whether (the stock market gains) were very high and very fast or not.”
Wall Street ended low on Tuesday, pulled down by Apple and Tesla as fears about excessively high ratings persisted.
The MSCI world equity index, which tracks stocks in 49 countries, gained 0.4%.
FROTHY PRICES?
Some analysts continued to warn that stock prices may be choppy – a fear echoed by a top Chinese regulator on Tuesday – and, as a result, make it difficult for stock markets to maintain gains.
Fears that the liquidation of U.S. Treasury bonds last week, which shook the stock markets, could resume, could also put a brake on stock prices, they said.
“Although the markets have stabilized …, the tone remains subdued, as investors continue to fear a further settlement of rates,” analysts at TD Securities said in a note.
The cautious climate weighed on the US dollar. He had won in recent days with investors’ hopes that the United States would enjoy a faster economic recovery and that the US central bank would tolerate higher bond yields.
A dollar index against six of its major peers changed little at 90.787, after falling from an almost month-long high overnight.
The Australian dollar, which benefited from bets on an acceleration in global trade, rose 0.1% to $ 0.7820, as stronger than expected economic growth in the fourth quarter fueled hopes for a healthy recovery. of the coronavirus pandemic.
Oil prices have increased as signs of progress in the launch of the COVID-19 vaccine in the United States, the world’s largest consumer, have increased demand expectations.
US West Texas Intermediate crude rose 0.4% to $ 59.99 a barrel. Brent futures rose by the same amount to $ 62.96. [O/R]
Reporting by Tom Wilson in London and Stanley White in Tokyo; Christopher Cushing, Christian Schmollinger, Larry King