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GLOBAL MARKETS-Stocks dip as yields hold near one-year high

Published 09/03/2021, 07:15 am
Updated 09/03/2021, 07:18 am
© Reuters.
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(Updates prices, market activity, comment)

* Dollar gains on euro, yen as U.S. yields race ahead

* Gold slides to 9-month low

* U.S. stock indexes higher except tech-heavy Nasdaq

* Banks, automakers lift European stocks

* Oil futures settle down 1.6%

By Chuck Mikolajczak and Matt Scuffham

NEW YORK, March 8 (Reuters) - A gauge of global stocks dipped in choppy trading on Monday as investors eyed the yield on U.S. Treasuries for signs of inflation pressures in the wake of the U.S. Senate's passage of a $1.9 trillion stimulus bill.

After climbing as high as 1.613% on the session, the third time above 1.6% in the past year, the U.S. 10-year Treasury yield held near a more than one-year high.

"If rates are grinding higher because people are getting optimistic about what economic growth looks like, that is still supportive for equity prices," said Tom Hainlin, global investment strategist at U.S. Bank Wealth Management's Ascent Private Wealth Group in Minneapolis.

"It is just if those rates start to get away from you on inflation expectations, then the multiples on stocks come down and there is more concern about that," he added.

Benchmark 10-year notes US10YT=RR last fell 12/32 in price to yield 1.5942%, from 1.554% late on Friday.

Investors have wrestled with whether the stimulus will help global growth rebound faster from the COVID-19 downturn or cause the world's biggest economy to overheat and lead to runaway inflation.

U.S. Treasury Secretary Janet Yellen said on Monday that President Joe Biden's coronavirus aid package will provide enough resources to fuel a "very strong" U.S. economic recovery, and noted "there are tools" to deal with inflation. largely expect an acceleration in inflation, stoked in part by the latest climb in oil prices, which on Monday briefly climbed above $70 for the first time since January 2020.

On Wall Street, the Dow advanced while the Nasdaq shed nearly 2%. The technology sector and other richly valued names have been highly susceptible to rising rates.

The Dow Jones Industrial Average .DJI rose 446.5 points, or 1.42%, to 31,942.8, the S&P 500 .SPX gained 4.11 points, or 0.11%, to 3,846.05 and the Nasdaq Composite .IXIC dropped 211.69 points, or 1.64%, to 12,708.46.

Shares of banks and automakers lifted European shares as investors continued to move into economy-linked sectors on hopes of a solid rebound from the coronavirus downturn.

The pan-European STOXX 600 index .STOXX rose 2.10% and MSCI's gauge of stocks across the globe .MIWD00000PUS shed 0.13%.

U.S. economic data also pointed to a continued recovery, as the Commerce Department said wholesale inventories increased solidly in January despite a surge in sales, suggesting inventory investment could again contribute to growth in the first quarter. foreign exchange markets, the dollar index =USD shot up to a high of 92.341, its highest since Nov. 24.

The dollar index =USD rose 0.465%, with the euro EUR= down 0.52% to $1.1855.

The Japanese yen weakened 0.51% versus the greenback at 108.86 per dollar, while sterling GBP= was last trading at $1.3837, down 0.03% on the day.

The jump in yields and the dollar has weighed on gold, which offers no fixed return.

Spot gold XAU= dropped 1.0% to $1,683.69 an ounce after hitting a nine-month low of $1,678.40. gold futures GCv1 settled 1.2% down at $1,678.

Oil prices rose after attacks on Saudi Arabian oil sites and the stimulus passage, before reversing course to trade lower on the day. crude futures CLc1 settled down $1.04, or 1.57%, at $65.05 per barrel. Brent crude futures LCOc1 settled at $68.24 per barrel, down $1.12 or 1.61%.

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