News: Stocks try to recover from bond whiplash, dollar gains.
NEW YORK (Reuters) – Global stock markets fainted on Friday as the Nasdaq and S&P 500 tried to rebound and the bond outt waned somewhat. However, fears of rising inflation continued to weigh on sentiment as data showed a strong rebound in US consumer spending.
Amazon.com Inc, Microsoft Corp and Alphabet Inc stocks rose after taking the brunt of this week’s downtrend while financial and energy stocks fell.
The S&P 500 was up 0.80% and the Nasdaq Composite was up 1.87%. However, the Dow Jones Industrial Average fell 0.3%.
US consumer spending rose the fastest in seven months in January as low-income households received more money for pandemic aid and new COVID-19 infections fell, preparing the US economy for faster growth.
The benchmark 10-year Treasury note hit 1.614% on Thursday, its highest level since the beginning of the year, and rocked world markets. The note’s yield has risen more than 50 basis points since the start of the year and is now close to the dividend yield on S&P 500 stocks.
The 10-year note fell 1.7 basis points to 1.4977%.
The amount of money swirling through markets and US stocks to near all-time highs has created fear among investors, said JJ Kinahan, chief market strategist at TD Ameritrade in Chicago.
“A lot of people take profits and don’t necessarily invest that money just yet,” Kinahan said, but the tug-of-war is not over yet.
“The US stock market is still the best game in terms of security and opportunity. But there is a shift. “
The magnitude of the Treasury’s recent sell-off prompted the Australian central bank to launch a surprise bond-buying operation to stop the bleeding.
The MSCI benchmark for global equity markets fell 0.83% to 661.49.
In Europe, the broad FTSEurofirst 300 index closed 1.64% at 1,559.48. Technology Stocks lost the most as they retreated further from their 20-year highs.
The dollar rose against most major currencies as US Treasury bond yields near year highs and riskier currencies like the Australian dollar weakened.
The dollar index rose 0.578% and the euro 0.78% to USD 1.2081. The Japanese yen fell 0.42% against the greenback to 106.66 per dollar.
Gold fell more than 2% to an eight-month low, the stronger dollar and soaring government bond yields hammered gold bars, setting it on track for the worst month since November 2016.
German government bond benchmark yields fell for the first time in three sessions but were still on track for their biggest monthly jump in three years after rising inflation expectations sparked a sell-off.
The 10-year German Bund note fell by less than 1 basis point to -0.263%.
The board member of the European Central Bank, Isabel Schnabel, reiterated on Friday that changes in nominal interest rates must be closely monitored.
Copper retreated after hitting consecutive multi-year highs for six consecutive sessions and fell more than 3% as risk sentiment hit broader financial markets after a surge in bond yields.
The three-month copper on the London Metal Exchange (LME) fell to $ 9,112 per ton.
The MSCI Emerging Markets Equity Index posted the largest daily decline since the markets rallied in March. The MSCI Emerging Markets Index fell 3.06%.
The surge in government bond yields led to ruin in emerging markets fears that the better yields in the US could pull funds away.
All of the currencies favored for leveraged carry trades suffered, including the Brazilian real and Turkish lira, which slipped for a fifth straight day, wiping out all of the year’s gains.
Previously, the largest sales were recorded in Asia. MSCI’s broadest index for stocks in the Asia-Pacific region outside of Japan fell more than 3% to a monthly low. This was the largest percentage loss since the market moved in late March.
Oil fell. The Brent crude oil futures fell $ 0.78 to $ 66.1 a barrel. The US crude oil futures were down $ 1.24 to $ 62.29 a barrel.
Reporting by Herbert Lash, additional reporting by Tom Arnold in London, Wayne Cole and Swati Pandey in Sydney; Adaptation by Larry King and Nick Zieminski
Original Source © Reuters