LONDON (Reuters) – Global sector markets plummeted Wednesday after a dramatic rebound in U.S. tech stocks, while dollar and benchmark yields both struggled ahead of major U.S. Treasury auction and inflation reading later.
But gains were down after Tuesday’s 20% rise in Tesla’s electric car doyen, a 4% jump in the Nasdaq and the biggest one-day gain for global depression of Amazon and Microsoft in more than a month.
Asia had bounced back from a two-month low when Chinese markets recently halted their central bank policy exacerbating concerns and Europe received early help with a new high for German DAX.
The dollar yield and the bond went up as well. Traders were focusing on U.S. bond auction and later inflation data, as well as Thursday’s European Central Bank meeting where it is expected to respond to the recent jump in loan costs .
Mikhail Zverev, head of global equities at Aviva Investors, said Tuesday’s furious moves in U.S. tech are undermining the volatile, growing markets dominated by large-scale volatile currencies. -year and the world trying to recover after the COVID -19 pandemic.
“The winds are blowing harder now. The world is not a more dangerous place, a small increase in flat rates is not a cataclysmic increase … but now the mind of the large herd is more inclined to circulate, ”he said.
“They’re moving more often, they’re moving faster and they’re leaving an inefficient path,” leaving markets vulnerable to large movements, he said.
Gains in Asian stocks came overnight after Chinese shares fell to their lowest levels since mid-December the previous day in anticipation of tighter policy and a slow economic recovery.
News that the $ 1.9 trillion U.S. coronavirus relief package was nearing final agreement has boosted global momentum in bond yields on Monday. That had pushed the Nasdaq more than 10% by its February 12 closing high, confirming a correction for the index.
Yields on benchmark 10-year notes were at 1.540%, after peaking at 1.626% on Friday, following Tuesday’s auction of $ 58 billion in 3-year U.S. pounds.
However, many market investors remained on the edge, with the next tests of investors ’desire for government debt to be paid later in the week in the form of 10-year and 30-year auctions. -year.
“While the bond market has gone up slightly, there will still be pressures,” said Naokazu Koshimizu, senior rate strategist at Nomura Securities.
“It is on the price in the future normalization of the Fed’s monetary policy, with the Fed’s policy eventually becoming neutral. But the price of his policy tightening has yet to materialize. ”
PALPATIONS INFLATION
Some investors see a real threat from the overheated U.S. economy and higher inflation behind the government’s planned spending increase.
U.S. consumer price data at 1330 GMT is expected to show a slight acceleration in overall inflation in February, with analysts expecting further gains in the coming months as a result of underlying effects from an early economic downturn. in 2020.
Accelerated rollout of COVID-19 vaccines in some countries and a planned U.S. stimulus package helped lay the foundation for a clearer global economic outlook, the group for Economic Cooperation and Development said Tuesday, as it lifted the forecast its 2021 growth.
In foreign exchange markets, the dollar has been supported by expectations for a faster economic recovery than the US.
The euro fell 0.25% to $ 1.1871, close to Tuesday’s 3 1/2-month low of $ 1.18355. The yen fluctuated at 108.70 per dollar, after setting a nine – month low of 109.235 the previous day.
The Australian dollar showed 0.6% at one point to an additional $ 0.7672 after the country’s chief banker market chat reiterated about early rate hikes.
Oil prices, which have risen 30% since the beginning of the year, rose at the same time as concerns about supply disruptions in Saudi Arabia eased.
Brent crude income came back from a nightmare to sit at $ 67.45 a barrel while U.S. crude futures were hovering above $ 64.18 a barrel, after hitting nearly 2 1/2-year high of $ 67.98 Monday.
Precious metal gold fell 0.1% to $ 1,714.55 per ounce after rising more than 2% on Tuesday.
“There is an element of price correction activity following the gold realm of gold conversion,” said Ilya Spivak, DailyFX money strategist.
Reporting with Hideyuki Sano in Tokyo and Matt Scuffham in New York; Edited by Sam Holmes, Richard Pullin and Ana Nicolaci da Costa