LONDON / SINGAPORE (Reuters) – US Treasury yields fell to a three-week low, while stock markets rallied on Tuesday as concerns over possible 1.9 trillion stimulus blockages dollars of the new president of the United States weighed on investor sentiment.
The growing number of coronavirus cases and the precaution ahead of the US Federal Reserve policy meeting this week also quenched the appetite for risk, supporting the dollar against a basket of currencies. Oil prices fell.
Germany’s ten-year government bond yield, considered Europe’s safest asset, fell to a two-week low amid a new period of political turmoil in Italy.
But European stock markets [.EU] rose after two sessions of falls, with the pan-European STOXX 600 up 0.8%, after Swiss wealth manager UBS recorded a quarterly net profit increase.
“The profit season so far has been very good, so it goes back to the fact that the market has been overbought and has had a sharp rise since January 1, with a lot of positive news on the price,” Francois said Savary, chief investment officer of Swiss manager Prime Partners, referring to recent losses.
“There is room for some consolidation.”
Future E-Minis for the S&P 500 are down 0.1%. On Monday, the Nasdaq index climbed a new peak, but the Dow Jones Industrial Average index fell [.N].
South Korea and Hong Kong outperformed losers in Asia overnight, falling more than 2% per piece. The sell-off also saw Japanese stocks fall 1% and Chinese blue-chips fall 2%, their biggest loss in a day since Sept. 9.
They had all hit record highs earlier this month.
MSCI’s All Country World index, which tracks stocks in 49 countries, was flat, while MSCI’s emerging markets stock index was 1.6% lower.
Tensions gradually in the Taiwan Strait and the South China Sea added to the caution in Chinese markets, where the jump in small-cap short-term bets has also caught the attention of regulators.
After concentrating on “buying it all” for several months, backed by pandemic stimulus packages to print money, near-zero interest rates, and the start of COVID-19 vaccination programs, some investors they are concerned that the markets are close to the territory of “bubbles”.
They point to the spectacular prices of assets like bitcoin or, on Monday, the growing stock of the video game store Gamestop.
U.S. lawmakers agreed that getting COVID-19 vaccines to Americans should be a priority, even when blocking horns above the size of a pandemic relief package. However, Democratic majority leader Chuck Schumer warned that the aid package could be four to six weeks.
Disagreements have led to months of indecision in the United States, where COVID-19 cases exceed 175,000 daily and millions of people are out of work.
“We suspect that revenue will not be able to keep up with what people expect this year,” said Jacob Doo, investment director at Envysion Wealth Management, citing blockades in Europe and the slow implementation of vaccines in United States.
“Within the technology space, we are now cautious about FANGS, simply because there could be antitrust laws that Biden would implement,” he added, using the acronyms of major U.S. technology companies, including Facebook and Amazon.
Investors are also looking forward to the Federal Reserve’s open market federal committee meeting on Tuesday and Wednesday.
“We expect the January FOMC to repeat and strengthen the Fed’s performance, which is still significant given recent reduced discussions and considerations by other central banks to adapt policy,” the strategic note said in a note. of CitiFX, Ebrahim Rahbari.
Against a basket from its rivals, the dollar rose 0.2% to 90.65, its highest level since Jan. 20, as stock volatility quenched the appetite for riskier currencies.
The euro, which fell on Monday after a poll showing falling German business morale, fell 0.2% to $ 1.2126. [USD/]
The U.S. Treasury’s benchmark ten-year yield fell a fraction to new three-week lows, with a recent operation of 1.0414%. [US/]
Germany’s ten-year bond yield fell one basis point to a two-week low of -0.561%, while Italian 10-year yields rose slightly on the day, by 0.655%.
Italian Prime Minister Giuseppe Conte will resign on Tuesday, his office said, in the hope that President Sergio Mattarella would give him the mandate to form a new government.
After rising nearly 1% on Monday, Brent crude fell 0.5% to $ 55.60 a barrel and U.S. crude lost 0.5% to $ 52.51. [O/R]
Spot gold fell 0.2% to $ 1,852.30 an ounce.
Edited by Shri Navaratnam, Richard Pullin and Catherine Evans