LONDON (Reuters) – Global stock markets plunged on Monday as investors waited for US earnings to justify high valuations, while a rise in bonds could be seen in what should be a strong reading of inflation and retail sales this week.
MSCI’s global country index, which tracks the shares of 49 countries, fell 0.25% after the start of European trading, off Friday’s record high.
European stocks fell record highs as investors prevented big bets before the profit season. The pan-European STOXX 600 index fell 0.3% at 0813 GMT.
The FTSE mid 250 national concentration index in Britain fell 0.6%, but fell below the record high as shops, pubs, gyms and hairdressers reopened after three months of closure .
The UK’s most export-oriented FTSE 100 fell 0.9%, the German DAX fell 0.1% and the French CAC 40 fell 0.2%. The FTSE MIB of Italy was the only winner, 0.05% more.
The VIX volatility index, also known as Wall Street’s “indicator of fear,” rose slightly to 17.44, after hitting its lowest level since Friday, March 2020.
“The fall indicates that investor sentiment is improving amid a perceived market risk perception,” BCA Research strategists said in a note to clients. “This progress is in line with other market developments: the S&P 500 is forging historic highs and Treasury bond yields have been rising since August, bolstered by improved economic outlook.”
Earlier in Asia, Tokyo’s Nikkei was down 0.6%. South Korean stocks were almost flat.
The Nifty 50 index fell 2.4% as India overtook Brazil to become the second country with the most cases of COVID-19.
Chinese blue chips lost 1.5% against a number of the country’s economic figures.
Shares of Alibaba Group Holding Ltd rose 16% after China imposed a record 18 billion yuan ($ 2.752 billion) fine on the e-commerce giant. More than a third of the shares are owned by US investors and account for more than 8% of the MSCI EM index.
Nasdaq futures fell 0.1% on Monday. Futures S&P 500 fell 0.2%.
Growth and technology stocks experienced a resurgence last week as U.S. 10-year Treasury yields fell as much as 1.65%, from a 14-month high of 1.766% .
Over the weekend, Federal Reserve Chairman Jerome Powell said the economy was about to start growing faster, although the coronavirus remained a threat.
This week’s data is expected to show that U.S. inflation jumped in March. Retail sales are seen to increase, perhaps even with a double-digit gain. The Treasury will also test the lawsuit with $ 100 billion in debt deals this week.
“Recent U.S. economic data has bolstered the reflation narrative, with the strongest ISM Services survey since 1997 and positive labor market signals,” said Mark Haefele, investment director at UBS Global Wealth Management .
“We also expect a recovery in European growth as vaccination programs increase. However, as accumulated demand meets supply constraints, a rise in inflation could disrupt investors.”
U.S. banks open their first-quarter earnings season this week with Goldman Sachs, JPMorgan and Wells Fargo slated for reporting Wednesday.
Analysts expect the profits of the S&P 500 companies to show a 25% jump over the previous year, according to data from Refinitiv IBES. This would be the strongest performance of the quarter since 2018.
The decline in yields was enough to see how the dollar came out of the boil last week. It was last listed at 92,254 against a basket of currencies, down from a high of 93,439.
It was lower against the yen at 109.39. The euro remained at $ 1.1879 and above its recent low of $ 1.1702.
Gold prices kept slowing to $ 1,737 an ounce, failing to hold the $ 1,758 high last week.
Last week, oil prices fell by around 2%, as production increased and COVID-19 blockades were renewed in some countries which offset optimism about the recovery in fuel demand.
Brent was 0.1% lower on Monday to $ 62.93 a barrel. US crude fell 0.2% to $ 59.22.
Reports by Ritvik Carvalho; additional reports from Wayne Cole in Sydney; edition by Larry King