SYDNEY (Reuters) – Stock markets turned mixed on Monday as the US Senate’s passage of a $ 1.9 trillion stimulus bill bodes well for faster global economic growth, but has also put new pressure on Treasuries and tech stocks with high valuations.
The good economic news continued as Chinese exports jumped 155% in February from a year earlier, when much of the economy shut down to fight the coronavirus.
“With the passage of the Senate, we expect growth momentum to accelerate and global GDP growth to reach an annualized rate of 7.5% in the middle of quarters,” JPMorgan economists said in a note.
“Every trillion dollars in fiscal stimulus adds about $ 4 to $ 5 to EPS, up 6 to 7 percent for the rest of the year.”
However, analysts also expected a sharp acceleration in inflation, fueled in part by the latest surge in oil prices, which was pushing up bond yields and stretching stock valuations, especially in the upper sector. technology.
This saw Nasdaq futures reversing early gains to slide 1.0%, causing S&P 500 futures to fall 0.2%.
The largest MSCI index of Asia-Pacific stocks outside of Japan followed with a 0.5% decline, while Chinese blue chips fell 0.9%.
The Japanese Nikkei held on to a gain of 0.2%, while EUROSTOXX 50 futures were still up 0.8% and FTSE futures were still up 0.9 %%.
Equity investors rejoiced at U.S. data showing non-farm payrolls jumped 379,000 jobs last month, while the unemployment rate fell to 6.2%, a positive sign for incomes, spending and more. corporate profits.
US Treasury Secretary Janet Yellen tried to counter inflation concerns by noting that the real unemployment rate was closer to 10% and the labor market was still very slow.
Still, yields on 10-year U.S. Treasuries again hit a one-year high of 1.625% following the data, and stood at 1.59% on Monday. Yields rose 16 basis points for the week, while German yields actually fell 4 basis points.
The European Central Bank is meeting on Thursday amid talks it will protest the recent rise in eurozone yields and perhaps consider ways to contain further increases.
The diverging path in yields propelled the dollar against the euro, which fell to a three-month low of $ 1.1892, and was last pinned at $ 1.1904.
BofA analyst Athanasios Vamvakidis argued that the potent mix of US stimulus, faster reopening and greater consumer firepower was a definite plus for the dollar.
“Including the currently proposed stimulus package and in addition to a second half infrastructure bill, total US budget support is six times the EU stimulus fund,” he said. -he declares. “The Fed is also supporting the growth of the American money supply twice as fast as that of the euro zone.”
The dollar index duly climbed to levels not seen since late November and was last at 92.057, well above its recent low of 89.677.
It also gained on the weak-performing Yen, hitting a nine-month high at 108.63, and last changed hands at 108.41.
Rising yields weighed on gold, which offers no fixed return, leaving it at $ 1,705 an ounce and just above a nine-month low.
Oil prices hit their highest level in more than a year after Yemen’s Houthi forces fired drones and missiles into the heart of Saudi Arabia’s oil industry on Sunday, raising production concerns.
Prices had previously been supported by a decision by OPEC and its allies not to increase supply in April. [O/R]
Brent climbed $ 1.44 per barrel to $ 70.80, while U.S. crude rose $ 1.36 to $ 67.45 per barrel.
Reporting by Wayne Cole; Editing by Sam Holmes