London — European stocks fell on Tuesday, but 10-year US inflation-indexed bond yields are positive for the first time in two years as aggressive federal tightening prospects to curb inflation have cornered investors. I turned around.
Investors were also prepared for the next barrage of corporate earnings to help assess the effects of the Ukrainian war and the surge in inflation.
Heineken, Nestle and Renault will report from Europe this week. Netflix, Tesla and Verizon will be reporting from the US this week.
Yields on 10-year US inflation-indexed bonds, held near their two-year highs on Monday, are within range of a positive turn for the first time since the outbreak of the pandemic.
Equity investors were reassured by the fact that bond yields were deep into the negative territory when the effects of inflation were removed, but that seems to be nearing the end.
At 1035 GMT, the Pan-Europe STOXX 600 fell 1.1%, Germany’s DAX fell 0.9%, and the UK’s FTSE 100 fell 0.4%. However, analysts warned about the interpretation of the move as liquidity declined over the long Easter weekend.
The MSCI World Equity Index, which tracks equities in 50 countries, was 0.3% lower. S & P 500 futures fell 0.3% and Nasdaq futures fell 0.4%.
The Federal Reserve is almost certain to raise interest rates by 50 basis points at next month’s meeting, not excluding a 75 basis point increase.
Federal Reserve Bank of St. Louis Governor James Bullard reiterated his claim to raise rates to 3.5% by the end of Monday, which was not his basic claim, but should discount a 75 basis point increase. is not.
Bailey Wakefield, Multi-Asset Portfolio Manager at Aviva Investors, said:
Wakefield added that the latest developments in Ukraine, where Russia has launched a new attack in the east, are affecting the market in terms of volatility.
The dollar index surpassed 101 for the first time since March 2020. This is because the greenback hit a 20-year high against the yen and tested a two-year peak in the euro as US Treasury yields rose.
Differences in monetary policy between Japan and the United States have pushed the yen to its weakest level at 128.465 against the dollar since 2002.
“Japan continues to aim to stimulate the economy, which is in stark contrast to what is seen in the United States and is expected to tighten more aggressively,” Wakefield added.
Benchmark 10-year Treasury yields were the last at 2.8877%, after reaching the highest level since late 2018 at 2.909%. For the first time since early 2019, the US Treasury yield has risen above 3.0% for 30 years.
German bond yields tracked US counterparts, and the European Central Bank’s non-commitment tone last week exposed German bonds to US bond sales.
Germany’s 10-year government bond yield rose 7.9 basis points (bps) to 0.916%, the highest since July 2015.
Oil prices have fallen, but investors have been worried about tight global supply after Libya was forced to suspend some oil exports as eastern forces widened the blockade of the sector.3 It has remained close to the highest price since mid-March.
Brent crude oil futures fell 1.3% to $ 111.66 a barrel. US crude oil futures fell 1.5% to $ 106.57 a barrel.
Gold prices were stable after approaching $ 2,000 per ounce during the Monday session. Spot gold was last at $ 1,976.04 an ounce.
Samuel Indik and Elizabeth Howcroft
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