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GLOBAL MARKETS-Stocks dip as rotation continues; yields, dollar rise

Published 13/03/2021, 04:08 am
© Reuters.
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* MSCI World down 0.2%, pressured by bond yields

* Oil, gold also lower; dollar gains

* Biden signs $1.9 trillion stimulus into law (Updates throughout, changes dateline from previous LONDON)

By Rodrigo Campos

NEW YORK, March 12 (Reuters) - An index of stocks across the world fell on Friday but was set to post its strongest weekly gain in five, while benchmark Treasury yields climbed to 13-month highs partly on optimism after a $1.9 trillion recovery package was signed into law.

Gains in Shanghai and Tokyo stock markets proved tough to match in Europe and on Wall Street, where banks were the silver lining and the Nasdaq underperformed as the rotation from growth to value continued. The Dow Industrials hit a record high.

The spike in Treasury yields gave support to the dollar while the sell-off in stocks shone a light on the greenback's safe haven appeal.

Against a backdrop of super-loose monetary policy, some analysts expect inflation to pick up as vaccine rollouts lead to economies reopening, leading to worries that the stimulus package could overheat the American economy. President Joe Biden signed the stimulus legislation before giving a televised address in which he pledged aggressive action to speed vaccinations and move the country closer to normality by July 4. risks of inflation picking up have increased significantly due to a jump in money supply through stimulus and the anticipated demand that we might see as the economy slowly unlocks," said Jonathan Bell, chief investment officer at Stanhope Capital in London.

The Dow Jones Industrial Average .DJI rose 141.83 points, or 0.44%, to 32,627.42, the S&P 500 .SPX lost 11.89 points, or 0.30%, to 3,927.45 and the Nasdaq Composite .IXIC dropped 152.25 points, or 1.14%, to 13,246.42.

The pan-European STOXX 600 index .STOXX lost 0.28% and MSCI's gauge of stocks across the globe .MIWD00000PUS shed 0.31%.

Emerging market stocks lost 0.75%. MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS closed 0.68% lower, while Japan's Nikkei .N225 rose 1.73%.

U.S. 10-year Treasury yields US10YT=RR rose above 1.6% and were on track to rise for the seventh straight week.

Bond selling "is more likely to be an expression of conviction about the economy," said in a note Jim Vogel, senior rates strategist at FHN Financial in Memphis, Tennessee.

Benchmark 10-year notes US10YT=RR last fell 27/32 in price to yield 1.6194%, from 1.527% late on Thursday.

The recent, sharp, market moves give even more importance to next week's meeting of the U.S. Federal Reserve for clues to its views on rising yields and the threat of inflation.

In currency markets, the dollar index =USD rose 0.242%, with the euro EUR= down 0.29% to $1.1949.

The Japanese yen weakened 0.39% versus the greenback at 108.92 per dollar, while Sterling GBP= was last trading at $1.3915, down 0.54% on the day.

Markets are likely to remain volatile in the second quarter, particularly for the dollar, which was much stronger than expected at the start of the year, said Cliff Zhao, chief strategist at China Construction Bank International.

"The strong U.S. dollar may weigh on some liquidity conditions in the emerging markets," he said.

The Institute of International Finance on Thursday urged the Fed to give guidance on its managing of higher yields to avoid even more outflows from emerging markets.

Oil prices were little changed, with both Brent and WTI struggling to keep the weekly performance in positive territory.

On Friday, U.S. crude CLc1 rose 0.09% to $66.08 per barrel and Brent LCOc1 was at $69.60, down 0.04% on the day.

Spot gold XAU= dropped 0.1% to $1,719.01 an ounce. Silver XAG= fell 1.14% to $25.78.

Bitcoin BTC=BTSP last fell 0.64% to $57,405.18.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Global assets

http://tmsnrt.rs/2jvdmXl Global currencies vs. dollar

http://tmsnrt.rs/2egbfVh Emerging markets

http://tmsnrt.rs/2ihRugV MSCI All Country World Index Market Cap

http://tmsnrt.rs/2EmTD6j Fund flows into U.S. based growth and value funds

https://tmsnrt.rs/3rKmhn2

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