LONDON (Reuters) – Global stock markets rose on Wednesday after an impressive rebound in US technology stocks as dollar yields and benchmark governments advanced ahead of a key Treasury auction American and a later inflation reading.
But gains fell after Tuesday’s 20% rise in Tesla’s electric car, 4% jump on the Nasdaq and the biggest one-day rise for global heavyweights Amazon and Microsoft by more than one month.
Asia had recovered from the two-month low as China’s markets set aside their recent central bank policies to harden concerns and Europe was soon helped by a new all-time high for the German DAX.
Dollar and bond yields also rose. Traders later focused on the US bond auction and inflation data, as well as on Thursday’s European Central Bank meeting, where it is expected to respond to the recent jump in debt costs.
Mikhail Zverev, head of global equities at Aviva Investors, said Tuesday’s wild moves in major U.S. technologies highlighted how volatile markets, increasingly dominated by large passive funds, will be likely this year. , as the world tries to restore after the COVID -19 pandemic.
“The winds are blowing harder now. The world is not a more dangerous place, a slight increase in interest rates is not a cataclysmic event … but now there is the mentality of a large herd with a greater propensity for rotations, ”he said.
“They move more often, move faster and leave a trail of inefficiency,” leaving markets vulnerable to large fluctuations, he added.
Earnings in Asian stocks overnight came after Chinese stocks had fallen to their lowest levels since mid-December the day before with the prospect of tighter policy and a slowdown in economic recovery.
News that a $ 1.9 trillion U.S. coronavirus relief package was nearing final approval on Monday sparked a global rebound in bond yields. This had pushed the Nasdaq more than 10% below its February 12 close, confirming a correction in the index.
Yield on the benchmark 10-year notes stood at 1.540%, up from 1.626% on Friday, after Tuesday’s auction of $ 58 billion in three-year U.S. notes was well received.
Still, many investors in the market kept up, and the next tests of investors ’willingness for public debt will have to be delivered by the end of this week in the form of ten- and thirty-year auctions.
“While the bond market has stabilized somewhat, pressures will remain,” said Naokazu Koshimizu, chief strategist at Nomura Securities rates.
“It has come at a price in the future normalization of the Fed’s monetary policy, and the Fed’s policy will eventually become neutral. But it has not yet come at a price in the possibility of its policy tightening.”
INFLATION PALPATIONS
Some investors see a real risk of an overheated U.S. economy and higher inflation behind the projected public spending boom.
U.S. consumer price data is expected to show a slight acceleration in global inflation in February, with analysts expecting new gains in the coming months due to the underlying effects of a severe economic downturn in early of 2020.
The faster deployment of COVID-19 vaccines in some countries and the stimulus package planned for the United States helped strengthen a brighter global economic outlook, the Organization for Economic Co-operation and Development said on Tuesday ( USA), while increasing its growth forecast for 2021.
In foreign exchange markets, the dollar was supported by expectations of a faster economic recovery in the US.
The euro relaxed 0.25% to $ 1.1871, a far cry from the 3-month low and averages of $ 1.18355. The yen changed hands at 108.70 per dollar, after reaching the nine-month low of 109,235 set the previous day.
The Australian dollar fell 0.6% at one point, to $ 0.7672, after the country’s top central banker turned down market talks about early rate hikes.
Meanwhile, oil prices, which have risen 30% since the start of the year, have remained as concerns about a supply disruption in Saudi Arabia eased.
Brent crude futures recovered from an overnight swing to $ 67.45 a barrel, while US crude futures traded at $ 64.18 a barrel, after having on Monday a maximum of about 2 1/2 years of $ 67.98.
Precious metals gold relaxed 0.1% to $ 1,714.55 an ounce, after rising more than 2% on Tuesday.
“There is a corrective price action element after a very lively gold rebound,” said Ilya Spivak, DailyFX currency strategist.
Report by Hideyuki Sano in Tokyo and Matt Scuffham in New York; Edited by Sam Holmes, Richard Pullin and Ana Nicolaci da Costa