© Reuters A man wearing a protective mask walks across a screen showing a graph showing the average movement of the latest Nikkei stocks outside the broker amid the coronavirus (COVID-19) outbreak in Tokyo, Japan, December 30, 2020.REUTERS / Issei Kato
By Simon Jessop
LONDON (Reuters) – Global stocks hit the pause and gold briefly hit a three-month high as COVID-19 infections skyrocketed in Asian countries and inflation put pressure on demand for riskier assets.
Markets have been in turmoil in recent weeks as the supply of central bank stimulus and rising prices in the United States and other countries has raised concerns that some economies may become so hot that policymakers will need to tap. brake
A broad gauge of the global equity market was flat in European trade, albeit less than 2% from its record high. It’s the best day since February, on Friday after a sell-off earlier this week.
However, and Nasdaq futures all pointed to a lower open market for Wall Street, with a 0.4 percent drop.
“What the market is doing is hoping for the best and preparing for the worst,” said Fahad Kamal, chief investment officer of Kleinwort Humboldt, although he added that he felt “the best way possible.” Inflation pressures will dissipate.
The stock also benefited from TINA, or the “no alternative” factor, he said.
“Stock market valuations do not give a green signal. But the question is, what against? If you buy a bond, you’re almost guaranteed to lose money, so the market is more tolerant of higher valuations. “
Advice from Asia was mixed overnight, with MSCI’s broadest Asia-Pacific equity index outside Japan flatting 0.9 percent and Chinese bluechips up 1.5 percent.
Wholesale prices in Japan, the world’s third-largest economy, in April rose sharply in six and a half years as rising energy and commodity costs hurt corporate profits, despite the inflation of consumer prices. Consumption will continue to weaken
In China, retail sales rose 17.7 percent in April from a year earlier, although it dropped from a 24.9 percent jump on a forecast, while industrial output matched expectations with a 9.8 percent increase.
Infection in the area
In addition, the spread of the coronavirus has led Singapore to report the largest number of local infections in several months, and Taiwan has seen an increase in the number of cases.
In the light of this week’s data calendar, all eyes will be on the Federal Reserve’s last policy meeting for clues about tightening monetary policy.
So far, the Fed has argued that soaring inflation is temporary. But the University of Michigan consumer survey last week found the highest long-term inflation in the past decade.
“We believe inflation has reached a significant turning point and we expect it to be higher than last round. But it’s not so high that it creates a massive disruption in the market, ”said Joseph Amato, Neuburgerberman’s chief equity investment officer.
“This drives us to have a positive view on risk assets and equities.”
After rising six-week highs above 1.70% last week, the 10-year bond yield edged lower and stood at 1.62%, while the dollar tumbled 0.1% against a basket of currencies at 90.20.
The euro was most recently up 0.2 percent at $ 1.2162, up 0.5 percent on Friday as returns eased.
Italy’s 10-year bond yield rose to an eight-month high as uneasiness about the future of Italy’s economic reforms, including slowing central bank bond purchases, fueled fresh sales.
It fell another 8.5 percent to its lowest level since February, after a tweet from Elon Musk hinting that Tesla (NASDAQ 🙂 might sell or will sell its holdings.
The drop in U.S. yields, combined with inflation concerns, helped gold hit a three-month high of $ 1,855 an ounce before pulling back trading up 0.4 percent at $ 1,849 an ounce.
Oil rebounded flat, down 0.1% at $ 68.62 and $ 65.29 a barrel, respectively.