Market Overview

Stocks climb as Treasuries stabilise

Global shares gained on Wednesday, with European indexes echoing positive moves in Asia, as a retreat in U.S. Treasury yields fuelled demand for riskier assets and weakened the dollar. The Euro STOXX 600 added 0.7%, with Frankfurt shares climbing 0.9% to a record high and London’s FTSE adding 1.3% before the UK’s new budget is introduced, with measures to boost the economy. Carmakers led the gains, adding as much as 2.6% to reach their highest since June 2018.

MSCI’s broadest index of Asia-Pacific shares outside Japan was up 1.7%, led by shares in China. E-mini S&P futures were up 0.6%. The gains for equities came as benchmark U.S. government bond yields continued to stabilise after last month’s sell-off. The yield on 10-year Treasury notes stood at 1.41%, down from last week’s one-year high of 1.61%, before a slew of U.S. economic data set for release later this week. Bond yields rise when prices fall.

Surging yields across the world, fuelled by moves in Treasuries, have buffeted financial markets in recent weeks. Investors were betting a strong U.S. economic rebound amid ultra-loose monetary conditions would fuel inflation. Still, optimism that more imminent U.S. stimulus will energise the global economic recovery buoyed stocks, with U.S. President Joe Biden close to passing a $1.9 trillion spending package.

Wall Street had ended lower on Tuesday, pulled down by Apple and Tesla as fears on overly high valuations lingered. The MSCI world equity index, which tracks shares in 49 countries, gained 0.4%. Some analysts continued to warn that stock prices may be frothy – a fear echoed by a top Chinese regulatory official on Tuesday – and as result make it hard for equity markets to hang on to gains.

Stocks climb as Treasuries stabilise, Reuters, Mar 3

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