LONDON (Reuters) – Global stocks fell from record highs on Monday as caution against rising coronavirus cases led to some earnings from investors, while treasury yields remained close to 10 months, indicating expectations of a global deviation from expected US fiscal stimulus.
Coronavirus cases worldwide exceeded 90 million on Monday, according to Reuters.
European stocks sank at the start of trading, with rising cases of coronavirus across the continent and China declining inventories. The German DAX lost 0.75%, the British FTSE 100, the Italian FTSE MIB, the French CAC 40 fell by about half a percent and the Spanish IBEX fell by 0.1%.[.EU]
As Asian stock markets are also lower, the MSCI All Country World index, which tracks stocks in 49 countries, fell 0.2%, just to a record high on Friday.
S&P 500 futures fell 0.6% from record highs after gaining 1.8% last week. EUROSTOXX 50 futures decreased by 0.1% and FTSE futures were fixed.
“There was a tremendous amount of optimism about the prospects for the stimulus when the Biden administration won those two seats in the Georgia Senate,” said Michael Huson, chief market analyst at CMC Markets in London, marking record highs on Friday.
“Friday’s payroll was disappointing, stressing the need for a more significant fiscal response. But as we approach the second week (of the new year), I think part of that optimism is a little softened by profit. “
In Asia, MSCI’s broadest Asia-Pacific equity index outside of Japan fell 0.1 percent to 5 percent last week. Japan’s Nikkei was on leave after closing at a 30-year high on Friday.
South Korea reversed an early jump to fall by 0.1% and Chinese blue chips fell by 1%.
Last week, Wall Street bankers warned of the best stock markets and the impending retreat after an abundance of unprecedented economic stimulus led to “sparkling” asset prices.
“I think there’s a perception that the markets are a little ahead of themselves,” Husson said.
Mark Hefele, chief investment officer at UBS Global Wealth Management, said in a note to clients that he did not see the assessments as a barrier to the continuation of shares, “especially against the background of continued political stimulus and the introduction of vaccines. ”
The treasury’s longer-term yields have been the highest since March, after Friday’s weak job report sparked speculation with more US fiscal stimulus now that Democrats have control of the government.
President-elect Joe Biden is set to announce plans for “trillions” in new relief bills this week, much of which will be repaid through increased loans.
At the same time, the Federal Reserve voices the content to place the burden on fiscal policy. Vice President Richard Clarida said there would soon be no change in the $ 120 billion debt that the Fed buys every month.
As the Fed did not want to buy longer-term bonds, the Treasury’s 10-year yields jumped nearly 20 basis points last week to 1.12%, the biggest weekly growth since June.
Treasury futures lost 3 more ticks early Monday.
BofA’s Mark Cabana warned that the stimulus could put additional pressure on the dollar and cause the Fed to start declining later this year.
“The Fed’s early ratio creates risks to our 10-year treasury target at the end of the year and supports our long-term expectations of neutral interest rates, which are hovering around 3%,” he said in a note to clients.
The report on poor wages will increase interest in US data on inflation, retail sales and consumer sentiment.
Profits will also be in focus, as JP Morgan, Citigroup and Wells Fargo are among the first companies to publish results for the fourth quarter on January 15.
The rise in yields, for its part, offered some support for the dollar, which had jumped to 90,338 from a basket of currencies from last week’s lowest level of 89,206.
The euro returned to $ 1.22185 from a recent high of $ 1.2349, breaking support around $ 1.2190. The dollar also rose to 104.18 yen from the trough of 102.57 reached last week.
The sudden rise in bonds undermined interest-free gold and fell 1.1 percent to $ 1,828 an ounce from its last high of $ 1,959. [GOL/]
Oil prices hit a profit after reaching their highest level in nearly a year on Friday, gaining 8% in the week after Saudi Arabia promised to cut production. [O/R]
Brent crude futures fell 0.7 percent to $ 55.56. US crude futures lost 0.3% to $ 52.10 a barrel.
Report by Ritvik Carvalho; additional reporting by Wayne Cole in Sydney; installation by Larry King