Reuters London (London)-World stock markets fell from Monday’s record highs. Investors profited from the cautious rise in coronavirus cases, while U.S. Treasury yields are still close to a 10-month high, indicating that US fiscal stimulus measures are expected to lead to Global inflation.
According to Reuters statistics, there were more than 90 million coronavirus cases worldwide on Monday.
European stock markets fell in early trading, and the number of coronavirus cases across the European continent increased. China dragged down commodity inventories. Germany’s DAX fell by 0.75%, Britain’s FTSE 100, Italy’s FTSE MIB and France’s CAC 40 each fell about 0.5%, and Spain’s IBEX fell by 0.1%.[.EU]
As Asian stock markets also fell, MSCI’s “All Countries” index, which tracks stocks in 49 countries, fell 0.2%, only slightly below the record high last Friday.
S&P 500 index futures fell 0.6% from a record high after falling 1.8% from last week’s high. EUROSTOXX 50 futures fell 0.1%, while FTSE futures were flat.
Michael Hewson, chief market analyst at CMC Markets in London, pointed out that “after the Biden government won two seats in the Georgia State Senate, people are very optimistic about the prospects of the stimulus package,” he noted. Five record highs.
Friday’s salary report was disappointing and emphasized the need for more important fiscal measures. However, as we enter the second week (of the New Year’s), I think this optimism has diminished due to profit settlement. “
In Asia, the Morgan Stanley Capital International (MSCI) index of Asia-Pacific stocks, the broadest outside of Japan, fell 0.1% and surged 5% to a record high last week. Japan’s Nikkei took a break after closing at a 30-year high on Friday.
South Korea reversed its early decline and fell 0.1%, while Chinese blue-chip stocks fell 1%.
Last week, after an unprecedented surge in economic stimulus measures that resulted in “bubble” asset prices, Wall Street bankers warned that the stock market would be at a high level and that it would retreat.
Hewson said: “I think the market may be slightly ahead.”
UBS Global Wealth Management Chief Investment Officer Mark Haefele (Mark Haefele) said in a report to clients that he believes that valuation will not become an obstacle to the stock market rebound, “especially when it continues to In the context of policy stimulus and the introduction of vaccines.”
On Friday, the weak employment report sparked speculation about more fiscal stimulus measures in the United States, as Democrats have taken control of the government and long-term Treasury yields reached their highest level since March.
President-elect Biden was due to announce plans this week in the new “trillion” relief bill, most of which will be paid through increased borrowing.
At the same time, the Federal Reserve (Fed) sounds content to shift fiscal policy to itself. Vice Chairman Richard Clarida said that the $120 billion in debt purchased by the Fed each month will not change anytime soon.
As the Fed is unwilling to buy more long-term bonds, the 10-year US Treasury bond yield jumped nearly 20 basis points last week to 1.12%, the biggest weekly increase since June.
Treasury bond futures fell another 3 basis points in early trading on Monday.
Bank of America’s Mark Cabana warned that stimulus measures could further depress the dollar and cause the Fed to begin gradually reducing interest rates later this year.
He said in a report to his clients: “The Fed’s early interest rate cut poses an upside risk to our year-end 1.5% 10-year US Treasury bond target and supports our long-term expectation of a 3% increase in the neutral interest rate.
Poor salary reports will increase interest in U.S. inflation, retail sales and consumer confidence data.
Since JP Morgan, Citigroup and Wells Fargo are among the first companies to release fourth-quarter results on January 15, earnings will also be the focus.
The rise in yields in turn provided some support to the US dollar, and the US dollar’s exchange rate against a basket of currencies rose to 90.338 from last week’s low of 89.206.
The euro fell back to 1.2185 from the recent high of 1.2349 against the US dollar, breaking through the 1.2190 support level. The dollar against the yen also rose to 104.18 from the low of 102.57 hit last week.
The sudden rise in bond yields destroyed non-interest-bearing gold, which fell 1.1% from its recent high of $1,959 to $1,828 per ounce. [GOL/]
Oil prices began to take profit after reaching their highest point in nearly a year on Friday. The week after Saudi Arabia promised to cut production, oil prices rose by 8%. [O/R]
Brent crude oil futures fell 0.7% to 55.56 US dollars. US crude oil futures fell 0.3% to US$52.10 per barrel.
Reporting by Ritvik Carvalho; Other reports by Wayne Cole in Sydney; Editing by Larry King