LONDON (Reuters) – Global stocks hit record highs on Monday as caution over coronavirus cases rose with investor profits, while Treasury yields remained close to a ten-month high. which indicates expectations for global reflection of the fiscal stimulus projected in the United States.
On Monday, according to the Reuters account, global coronavirus cases exceeded 90 million.
European stocks fell at the start of trading, with an increase in coronavirus cases across the continent and China dragged down commodity stocks. The German DAX lost 0.75%, the British FTSE 100, the Italian FTSE MIB and the French CAC 40 fell about half a percentage each and the Spanish IBEX fell 0.1%.[.EU]
With Asian stock markets also lower, MSCI’s All Country World index, which tracks stocks in 49 countries, fell 0.2%, just ahead of Friday’s record high.
S&P 500 futures fell 0.6% from record highs, after gaining 1.8% last week. EUROSTOXX 50 futures relaxed 0.1% and FTSE futures were flat.
“There was great optimism about stimulus prospects with the Biden administration winning those two seats in the Georgia Senate,” said Michael Hewson, chief market analyst at CMC Markets in London, noting the record highs. of Friday.
“Friday’s payroll report was disappointing, underscoring the need for a more meaningful fiscal response. But as we enter the second week (of the new year), I think part of that optimism is “It has moderated a bit with profit-making.”
In Asia, MSCI’s broader Asia-Pacific stock index outside of Japan fell 0.1%, after rising 5% last week to peak. The Japanese Nikkei was on vacation after closing for a maximum of 30 years on Friday.
South Korea reversed an early jump to a 0.1% drop, and Chinese blue chips fell 1%.
Last week, Wall Street bankers warned of toppy stock markets and an impending setback after the exuberance of an unprecedented economic stimulus had sparked “sparkling” asset prices.
“I think there’s a perception that maybe the markets are moving slightly,” Hewson said.
Mark Haefele, investment director of UBS Global Wealth Management, said in a note to clients that he does not consider valuations to be a barrier to continued equity concentration, “especially in the context of continued stimulus from policy and vaccine deployment. ”
Long-term Treasury yields have been at their highest since March, after Friday’s weak job report fueled speculation about more U.S. fiscal stimulus now that Democrats have control of the government.
This week, President-elect Joe Biden will announce plans for “trillions” in new relief bills, much of which will be paid for increased debt.
At the same time, the Federal Reserve sounds happy to put responsibility in fiscal policy. Vice President Richard Clarida said there will soon be no change in the $ 120 billion debt the Fed buys each month.
As the Fed is reluctant to buy bonds with a longer date, ten-year Treasury yields jumped nearly 20 basis points last week to 1.12%, the biggest weekly rise since June.
Treasury futures lost another 3 ticks early Monday.
Mark Cabana at BofA warned that the stimulus could put even more pressure on the dollar and cause the Fed’s downturn to begin later this year.
“An initial Fed reduction creates upside risks to our 10-year Treasury target at the end of 1.5% and supports our long-term expectations of neutral rates moving toward 3% “, he said in a note to customers.
Poor payroll reporting will increase interest in U.S. data on inflation, retail sales and consumer sentiment.
Profits will also focus, as JP Morgan, Citigroup and Wells Fargo are among the first companies to post fourth-quarter results on January 15th.
The rise in yields, in turn, offered some support for the dollar, which had risen to 90.338 against a basket of currencies from last week’s low of 89,206.
The euro retreated to $ 1.2185, from the last first $ 1.2349, breaking support at around $ 1.2190. The dollar also rose to 104.18 yen from a range of 102.57 times last week.
The sudden rise in bonds results in an undercutting of gold, which pays no interest, and fell 1.1%, to $ 1,828 an ounce, from its recent peak of $ 1,959. [GOL/]
Oil prices had profits after hitting a one-year high on Friday, gaining 8% a week after Saudi Arabia pledged to cut production. [O/R]
Brent crude futures fell 0.7% to $ 55.56. US crude oil futures lost 0.3% to $ 52.10 a barrel.
Reports by Ritvik Carvalho; additional reports from Wayne Cole in Sydney; edition by Larry King