Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Global equities rise as U.S. bond yield fears ease

EconomyFeb 24, 2021 20:31
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
2/2 © Reuters. An investor sits next to a stock quotation board at a brokerage office in Beijing 2/2

By Herbert Lash

NEW YORK (Reuters) - A gauge of global equity markets rose on Wednesday after Federal Reserve Chair Jerome Powell said interest rates will remain low, calming market jitters sparked by a jump in U.S. Treasury yields on fears a robust recovery would drive inflation higher.

Sales of new U.S. single-family homes increased more than expected in January as the median sale price rose 5.3% on a year-over-year basis, the latest data to show certain consumer prices are rising faster than expected.

Crude oil rose more than 2% to fresh 13-month highs while gold prices struggled for traction as elevated Treasury yields eroded the allure of bullion as an inflation hedge.

The dollar slid to multi-year lows against the pound and commodity-linked currencies including the Canadian, Australian and New Zealand dollars, as they're expected to benefit from a pick-up in global trade as world growth rebounds.

MSCI's all-country world index, a gauge of equity markets in 49 countries, added 0.16%, as rising stocks on Wall Street pushed the global benchmark to reverse losses.

Progress in the roll-out of coronavirus vaccines, which was boosted by news that Johnson & Johnson (NYSE:JNJ)'s one-shot vaccine appeared safe and effective, has increased economic optimism but also inflation concerns, said Patrick Leary, chief market strategist and senior trader at Incapital in Minneapolis.

"If you look at commodity prices, you look at real estate prices and you look at energy prices, they're up significantly higher than even pre-pandemic levels," he said.

In testimony before the House of Representatives Financial Services Committee, Powell reiterated the Fed's promise to get the U.S. economy back to full employment and to not worry about inflation unless prices rise in a persistent and troubling way.

While rising yields give stock investors pause, the Fed is "pretty comfortable" with them as they take some of the froth out of the financial system, Leary said.

The 10-year U.S. Treasury note yield rose 2.2 basis points to 1.3859% after hitting 1.435% earlier. The benchmark Treasury yield traded at 0.912% at the end of 2020.

The slipping of 10-year Treasury yields below the 1.4% mark helped equity markets rebound from early losses, but the rotation out of technology stocks was apparent, with Apple Inc (NASDAQ:AAPL) and Amazon.com Inc (NASDAQ:AMZN) leading Wall Street lower. In Europe, the tech sector has lost nearly 4% this week.

The Dow Jones Industrial Average rose 1.23%, the S&P 500 gained 0.97% and the Nasdaq Composite advanced 0.63%.

Europe's broad FTSEurofirst 300 index closed up 0.4% at 1,590.09 after earlier trading lower on inflation fears.

The benchmark 10-year German Bund was steady after yields jumped on Tuesday.

A sharp rise in real bond yields in line with those seen during previous "bond tantrum episodes" would reduce the upside potential for European equities, BofA Global Research said.

Sectors set to benefit from a stronger economy were supported by German GDP data, as exports and solid construction activity helped Europe's biggest economy to grow by a better-than-expected 0.3% in the fourth quarter.

Germany's DAX rose 0.8%.

Falling tech stocks, which are sensitive to rising yields, pulled Asian markets lower overnight.

Bitcoin recovered a bit, up 0.5% at $49,139.34.

The dollar index rose 0.074%, with the euro down 0.03% to $1.2145. The Japanese yen weakened 0.65% versus the greenback to 105.92 per dollar.

Oil prices rose after U.S. government data showed a drop in crude output after a deep freeze disrupted production last week.

Brent crude futures settled up $1.67 at $67.04 a barrel, while U.S. crude futures rose $1.55 to settle at $63.22 a barrel.

Brent and U.S. West Texas Intermediate (WTI) crude futures have both risen by about 28% so far in 2021.

U.S. gold futures settled down 0.4% at $1,797.90 an ounce.

(GRAPHIC - Up and away: global bond yields on the rise: https://fingfx.thomsonreuters.com/gfx/mkt/qzjpqgobnpx/bondyields2302.png)

Global equities rise as U.S. bond yield fears ease
 

Related Articles

Dollar inches lower as Treasury yields hold firm
Dollar inches lower as Treasury yields hold firm By Reuters - May 17, 2021

By Stephen Culp NEW YORK (Reuters) - The dollar edged lower on Monday as inflation jitters, exacerbated by record high prices paid in a regional U.S. manufacturing survey,...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (1)
David Hawley
David Hawley Feb 24, 2021 7:07
Saved. See Saved Items.
This comment has already been saved in your Saved Items
I don't understand this co-relation between tech stocks and bond yields. Neither do I care. I only know that bond yields have fallen from 1.37% down to 1.33% and yet stock market investors are still worried that interest rates may have to rise...by what? 0.25%? And is that such a hard pill to swallow when interests rates have been at zero for years. Common sense tells you they can't stay at zero for ever and that firms can and will have to live with it, as they have done throughout history, and they have still managed to thrive on them. All I can say is that the kind of people who have enough money to manipulate the market are the last person I would ever wish to meet.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email