Stock prices fall and bond yields bounce due to inflationary instability in petroleum fuels

Hong Kong-From Europe to Asia, stock prices fell on Wednesday, government bond yields rose as oil prices reached their highest levels in the last seven years, raising concerns about rising inflation.

The Euro STOXX 600 fell 1.8%, the best day of Tuesday’s 11 weeks, tech stocks fell more than 2%, and Germany led the loss at 1.6%.

The mood was set to hit Wall Street, where US futures gauges lost 0.9% to 1.1%.

The pressure on the stock market was that oil prices reached their highest level since November 2014, and investors are urging central banks to raise interest rates more quickly to counter rising inflation due to rising energy costs. I was worried that I might be forced to do so.

US crude rose 0.4% to $ 79.22 a barrel and Brent crude rose 0.4% to $ 82.87, approaching the top three-year hit in the previous session.

Concerns about energy supply and the decision on Monday for producers to stick to the planned increase in production rather than further increase were behind the increase.

Inflationary instability supported the dollar by causing longer-term US Treasuries and eurozone benchmark debt to sell out.

Mike Bell, Global Market Strategist at JP Morgan Asset Management, said:

Crude oil pipe
A maze of crude oil pipes and valves is depicted during a tour by the Energy Department of the Strategic Petroleum Reserve in Freeport, Texas, on June 9, 2016. (Richard Carson / Reuters)

“The market sees it and thinks,’Is there a scenario where everyone’s inflation is temporary and may be a little more sustainable?'”

The benchmark 10-year yield rose 4.5 basis points, reaching 1.573% during the Asian session and rising nearly 11 bps in three days. They were finally 1.5519 percent.

Yields on 20-year and 30-year government bonds have also jumped to their highest levels since June.

Benchmark Eurozone bond yields have risen to new highs in markets where inflation fears to be more tenacious than expected. Germany’s 10-year yield, the block benchmark, has risen to its highest level since late June.

The MSCI World Equity Index, which tracks equities in 50 countries, fell 0.4%. MSCI’s widest non-Japanese Asia-Pacific stock index fell 0.3%.

Grace Peters, Head of EMEA Investment Strategy at JP Morgan Private Bank, said:

“From April to the present, the data is more volatile and more interpretable. Therefore, the market is concerned about the glide path from here.”

The Chinese market remained closed due to a holiday, and shares in the underfunded developer China Evergrande were suspended due to a suspension of trading on Monday until a significant deal was announced.

Dollar up, kiwi down

The dollar rose against baskets of other major currencies, supported by higher yields, and returned to a year-long high last month.

The dollar rose 0.3% to 94.0232, gaining momentum during European time.

The New Zealand dollar expanded its losses as US yields rose after the Reserve Bank of New Zealand raised its official discount rate for the first time in seven years.

Kiwi was $ 0.6896 at the last 0.9%.

The euro was fixed below $ 1.16 and finally fell 0.2%. This is barely above last week’s 14-month low.

Tom Wilson and Arun John