Join +750K new investors every month who copy stock picks from billionaire's portfoliosSign Up Free

GLOBAL MARKETS-Equities slip as Treasury yields hit three-year highs

Published 30/01/2018, 05:23 am
© Reuters.  GLOBAL MARKETS-Equities slip as Treasury yields hit three-year highs
EUR/USD
-
USD/JPY
-
US500
-
DJI
-
JP225
-
GS
-
AAPL
-
DX
-
LCO
-
CL
-
IXIC
-
DE10YT=RR
-
US10YT=X
-
FTEU3
-
MIWD00000PUS
-
DXY
-
SPLRCT
-

(Adds U.S. market, byline, dateline; previous LONDON)

* U.S. Treasury yields at more than three-year highs

* German bond yields rise as ECB urged to end asset purchases

* Dollar set for biggest monthly fall in nearly two years

By Herbert Lash

NEW YORK, Jan 29 (Reuters) - Global equity markets slipped on Monday and U.S. Treasury yields surged to more than three-year highs after remarks by a European Central Bank official added to expectations that central banks globally will reduce stimulus as the economic outlook improves.

In the U.S., the Dow Jones Industrial Average fell more than 100 points, weighed down by a slide in Apple AAPL.O shares after the Japanese newspaper Nikkei reported that the company will halve the production target for its flagship iPhone X this quarter. report added to growing concerns about weak sales of the $999 phone ahead of Apple's quarterly results slated for release on Thursday.

The technology sector's .SPLRCT 0.5 percent drop weighed the most on U.S. markets, but the biggest decliners were the defensive sectors, utilities, real estate and telecommunications, all down more than 0.8 percent as U.S. 10-year Treasury yields hit their highest since 2014. US/

A break of technical support levels added to bearish sentiment as 10-year yields rose above a trendline that has marked a more than 30-year bull run dating back to the 1980s.

"Key levels were taken out, the trend is broken," said Tom di Galoma, a managing director at Seaport Global Holdings in New York. "It's probably a realization that the global economy is moving ahead and has quite a bit of steam."

In Europe, the pan-European FTSEurofirst 300 index .FTEU3 closed down 0.20 percent at 1,570.85 and MSCI's gauge of stocks across the globe .MIWD00000PUS shed 0.44 percent.

On Wall Street, the Dow Jones Industrial Average .DJI fell 87.09 points, or 0.33 percent, to 26,529.62. The S&P 500 .SPX lost 8.43 points, or 0.29 percent, to 2,864.44 and the Nasdaq Composite .IXIC dropped 15.14 points, or 0.2 percent, to 7,490.63.

Five-year German bond yields turned positive for the first time since late 2015 and yields across the euro area hit fresh highs after Dutch central bank chief Klaas Knot said the ECB should make clear it would end its bond purchases this year.

Knot said on Sunday the ECB should end its asset purchases after the current bond-buying program ends in September, adding: "There is no reason whatsoever to continue the program." 10-year bond yield rose to its highest in more than two-years at 0.625 percent DE10YT=TWEB .

The rise in government bond rates could stall the equity market rally and lead the U.S. Federal Open Market Committee to raise interest rates faster than expected this year, said Mike Terwilliger, portfolio manager of Resource Liquid Alternatives for the Resource Credit Income Fund.

"If Treasuries cross the psychologically significant 3.0 percent threshold in the coming weeks, I would expect the broader equity markets to begin considering the risk of an acceleration in the pace of FOMC hikes," Terwilliger said.

Reuters data point to market expectations of about three more Fed rate hikes this year, starting in March, although some analysts, including at Goldman Sachs (NYSE:GS) and JP Morgan Asset Management, expect the Fed to raise four times.

The benchmark 10-year Treasury note US10YT=RR fell 12/32 in price to yield 2.7048 percent, up from 2.662 percent late on Friday.

The dollar rose against a basket of currencies as bond yields climbed. The dollar index .DXY rose 0.4 percent, with the euro EUR= down 0.4 percent to $1.2369. The Japanese yen JPY= eased 0.34 percent versus the greenback at 109.08.

Oil prices slipped 1.5 percent, pressured by a strengthening dollar and rising U.S. crude output, but prices remained on track for the biggest January increase in five years.

Brent crude futures LCOc1 were down $1.15 at $69.37 a barrel. U.S. West Texas Intermediate (WTI) crude futures CLc1 were 64 cents lower at $65.50 a barrel.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.