LONDON / TOKYO (Reuters) – Global equities gained on Wednesday, with European indices echoing positive moves in Asia as a decline in U.S. Treasury yields fueled demand for riskier assets and weakened the dollar.
The euro STOXX 600 added 0.7%, with shares of Frankfurt rising 0.9% to a record and the FTSE of London 1.3% before the new UK budget was presented , with measures to boost the economy.
Truck manufacturers led the gains, adding up to 2.6% to reach the maximum since June 2018.
MSCI’s broader Asia-Pacific equity index outside of Japan rose 1.7%, led by China’s equities.
Futures E-mini S&P rose 0.6%.
Equity gains came as fixed-income yields on U.S. government bonds continued to stabilize after last month’s sale.
The yield on 10-year Treasury bills stood at 1.41%, below last week’s high of 1.61%, before a series of U.S. economic data was released in later this week. Bond yields increase when prices fall.
Growing yields around the world, driven by Treasury movements, have hit financial markets in recent weeks. Investors were betting on a strong U.S. economic rebound amid extremely weak monetary conditions that would fuel inflation.
Still, optimism that a more imminent stimulus in the United States will boost global economic recovery boosted stocks, with U.S. President Joe Biden about to approve a $ 1.9 trillion spending package. dollars.
“We are caught 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 re-evaluating the situation to see if it has been too fast (stock market gains) and too fast.”
Wall Street had ended lower on Tuesday, knocked down by Apple and Tesla while fears about overly high ratings persisted.
The MSCI global equity index, which tracks the shares of 49 countries, rose 0.4%.
FROTHY PRICES?
Some analysts went on to warn that stock prices could be sparkling – a fear echoed on Tuesday by a senior Chinese regulator – and therefore hampered equity markets to maintain gains.
Fears that last week’s sales at the U.S. Treasury, which slowed stock markets, could pick up, could also cap stock prices, they said.
“While markets have stabilized … the tone remains weak as investors continue to fear a new sell-off,” TD Securities analysts said in a note.
Prudent humor affected the US dollar. It had won in recent days by investor hope that the United States would enjoy a faster economic recovery and that the U.S. central bank would tolerate higher bond yields.
A dollar index against six of its top peers changed slightly to 90,787, after falling from a one-month high overnight.
The Australian dollar, which has benefited from bets on an acceleration in world trade, rose 0.1% to $ 0.7820 as stronger-than-expected economic growth in the fourth quarter fueled hopes for a V-shaped recovery from the coronavirus pandemic.
Oil prices rose as signs of progress in the deployment of the COVID-19 vaccine in the United States, the world’s largest consumer, raised demand expectations.
Intermediate crude from west Texas to West rose 0.4% to $ 59.99 a barrel. Brent futures rose the same amount to $ 62.96. [O/R]
Report by Tom Wilson in London and Stanley White in Tokyo; edited by Christopher Cushing, Christian Schmollinger, Larry King