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GLOBAL MARKETS-Stocks slide toward longest losing streak of the year

Published 25/04/2018, 10:47 pm
© Reuters.  GLOBAL MARKETS-Stocks slide toward longest losing streak of the year
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* MSCI world index falls for 5th day running

* Caterpillar (NYSE:CAT) earnings highlight concerns about economic peak

* U.S. bond yields rise past 3 pct, 2011 highs next focus

* EM currencies feel heat of higher U.S. yields

* European shares fall 0.3-0.9 pct

* Turkey hikes rates, Facebook status update coming

By Marc Jones

LONDON, April 25 (Reuters) - Shares were on their way to the longest losing streak of the year on Wednesday, as an advance in U.S. bond yields beyond 3 percent and warnings from top global firms about rising costs fed fears that a boom in earnings may have peaked.

All eyes will be on the scandal-hit social media firm Facebook FB.O later when it reports its results, though there was plenty to keep investors occupied till then.

Falls in Asia's and then Europe's main bourses pushed the 47-country MSCI world share index .MIWD00000PUS down for a fifth day running to its lowest level for more than two weeks. .EU

Tech-heavy Taiwan shares .TWII had hit two-month lows as worries about a slowdown in gadget demand spread, while oil firms .SXEP also eased as crude prices LCOc1 came off 3-1/2 year highs. O/R

Wall Street looked set to follow suit .N as the benchmark U.S. 10-year Treasury yield continued to push above 3 percent US10YT=RR , having broken the psychologically key level on Tuesday for the first time since the start of 2014. US/

It has been down to a mix of factors. A strong U.S. economy and rising commodity prices which are increasing the chance of more U.S. interest rate hikes, as well higher debt and improving relations between Washington and China and North Korea.

"The now healthier global economy justifies these higher yields," JPMorgan (NYSE:JPM) Asset Management's Seamus Mac Gorain said.

"We expect 10-year Treasuries (yields) to end the year between 3 and 3-1/2 percent. A move beyond this level would likely require an acceleration of inflation in the euro zone and Japan, which is not yet evident."

Euro zone bond yields - yields are a proxy of borrowing costs - were dragged up in the slipstream of the U.S. moves though Thursday's looming European Central Bank (ECB) meeting ensured there was a touch of caution. GVD/EUR

Markets want to know when the ECB plans to wind down its 2.55-trillion-euro stimulus programme. One of its policymakers, France's Francois Villeroy de Galhau, said on Tuesday the weaker run of recent economic data was expected to pass. pan-European STOXX 600 .STOXX equity index was last down 0.9 percent, as worries over the rising bond yields trumped a slew of well-received earnings updates from Kering (PA:PRTP) Credit Suisse CSGN.S as well as a flurry of takeover activity.

S&P E-mini futures ESc1 slipped 0.5 percent. Wall Street shares had skidded on Tuesday, with the S&P 500 .SPX slumping 1.34 percent, the most in two-and-a-half weeks. .N

Industrial heavyweight Caterpillar CAT.N beat earnings estimates due to strong global demand but its shares tumbled 6.2 percent after management said first-quarter earnings would be the "high water mark" for the year and warned of increasing steel prices. seen quite a lot of companies announcing above-estimate earnings and their shares falling sharply," Mitsubishi UFJ Morgan Stanley (NYSE:MS) Securities senior investment strategist Norihiro Fujito said.

Reuters data shows that analysts are now estimating bumper 21.1 percent growth in the January-March quarter among U.S. S&P500 firms.

Fujito noted major financial shares such as Goldman Sachs (NYSE:GS) GS.N and Citigroup (NYSE:C) C.N as well as Google parent Alphabet (NASDAQ:GOOGL) GOOG.N , the first major tech firm to report earnings, have followed a similar pattern.

"The market reaction so far feels as if we are starting to see an end of its long rally since 2009. Investors could be thinking that the best time will be soon behind us," he said.

STATUS UPDATE

Facebook's results are due after the closing bell. Revenues are expected to be up sharply but focus will all be on what impact the scandal over the misuse of tens of millions of its users' data has had on usage of the social media site. .N

Creeping gains in U.S. Treasury yields are also fuelling nerves that portfolio managers may move money into safer fixed-income securities at the expense of riskier assets such as stocks and emerging markets. 10-year U.S. Treasuries yield US10YT=RR rose to as high as 3.02 percent. A break above its January 2014 peak of 3.041 percent could turn investors even more bearish.

Fed Funds rate futures prices 0#FF: have been constantly falling this month, pricing in a considerable chance of three more rate hikes by the end of this year.

The impact is already reverberating in many emerging markets, with JPMorgan's emerging market bond index .JPMEPR hitting a two-month low.

Turkey's central bank took what was seen as a crucial interest rate decision. The lira has tumbled to all-time lows this year, stoking inflation, and its slightly larger-than- expected 75 basis points hike to 13.5 percent kept its markets largely in check. Indonesia, a market with one of the largest exposures to foreign portfolio holdings, the authorities have been intervening heavily to put a floor under the rupiah IDR= , which has been flirting with two-year lows.

The Indian rupee hit a 13-month low INR=IN while China's yuan CNH= CNY= eased again in line with its bond yields following recent tweaks to its policy settings.

The dollar also continued gaining against the major currencies, setting new 2-1/2-month highs of 109.21 yen JPY= and $1.2175 per euro EUR= .

Oil prices were broadly steady below the more than three-year highs hit in the previous session. Rising U.S. fuel inventories and production weighed on an otherwise heavily bullish market.

Brent LCOc1 fetched $74.01 a barrel, up 15 cents. West Texas Intermediate (WTI) crude CLc1 traded flat $67.88 while aluminium levelled off at $2,236 a tonne having been on a rollercoaster run in recent weeks following U.S. sanctions on Russia's top producer of the metal, United Company Rusal 0486.HK MET/L

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http://reut.rs/2sSBRiD Global corporate earnings

https://reut.rs/2FeyaIU

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