Global stocks tumbled and US Treasury yields plunged on Tuesday, as low trading volume, calm in economic news and lack of a catalyst for a rally in stocks triggered a sell-off by investors worried about limiting further gains in the markets.
The tech-rich Nasdaq (.IXIC) fell 1.9%, its biggest one-day drop in nearly six weeks, while the 10-year Treasury bond yields dropped to a low of 1.557%, usually pushing tech stocks higher. … to reduce financing costs.
Rising commodity prices have counteracted downturns in stock markets, helping to spark talk of higher inflation, while the dollar rallied after US Treasury Secretary Janet Yellen said interest rates may need to be raised to prevent overheating of the US economy. more Yellen later downplayed concerns about inflation and rate hikes.
The Refinitiv / CoreCommodity CRB Index (.TRCCRB) traded near three-year highs as commodities rallied on investor bets that demand would rise as the economy resumes.
Investors sold high-tech stocks that doubled the value of the Nasdaq from March 2020 lows and bought government debt, resulting in lower yields.
Apple Inc (AAPL.O), Amazon.com Inc (AMZN.O) and Microsoft Corp led the fall of the Nasdaq and the S&P 500.
“There is not a lot of conviction among traders about how the markets should go,” said Patrick Leary, chief market strategist and senior trader at Incapital. “We appreciated a lot of the newfound optimism.”
The MSCI Index for World Equities (.MIWD00000PUS) fell 0.81% to 697.60.
On Wall Street, the Dow Jones Industrial Average (.DJI) rose 0.06%, the S&P 500 (.SPX) lost 0.67%, and the Nasdaq Composite (.IXIC) fell 1.88%.
Economically Sensitive Value (.RLV) shares rose 0.04%, beating the 1.6% fall in growth stocks (.RLG). After falling on Tuesday, the Russell 1000 Growth Index (.RLVTRI) nearly tripled the Russell 1000 Growth Total Return Index this year.
European tech stocks (.SX8P) fell 3.8% on their worst day since late October. The German Stock Exchange (.GDAXI) lost 2.5%, the most in Europe, due to the high composition of technology stocks.
Chipmaker Infineon (IFXGn.DE) dropped 5.9%, one of the main indicators of the German index, after the company said that restrictions on the supply of cars will only ease in the second half, and lost volumes are likely to be replenished in 2022.
Skepticism has crept into the Treasury market that the upcoming economic data may not be as brilliant as the market estimates, which is holding back the growth of long-term bonds. The last time the 10-year Treasury bond yielded was 1.587%.
In foreign exchange markets, the dollar has regained some footing to partly unwind last month’s lengthy fall as investors equalized ahead of monthly payroll data due later in the week.
The dollar index rose 0.289%, the euro fell 0.36% to $ 1 in 2018. The Japanese yen fell 0.19% against the dollar to hit 109.28 per dollar.
Signs that the world’s major central banks are still reluctant to abandon their massive stimulus programs are keeping 10-year US Treasury yields below 1.65% and German bond yields below 13-month highs.
Australia’s central bank left its key interest rates almost at zero the day before at its fifth meeting in a row and pledged to maintain its policy for an extended period of time. read more
The Australian S & P / ASX200 (.AXJO) rose 0.6% and the Hong Kong Index (.HSI) climbed 0.7% in sluggish Asian trading due to holidays in both China and Japan.
Cryptocurrency ether hit another all-time high, close to $ 3,500, before equalizing in gains and closing 0.8% lower.
Oil prices rose after other U.S. states eased restrictions due to the pandemic and the European Union sought to attract travelers, although the rise in COVID-19 cases in India has limited growth.
Brent crude oil futures climbed $ 1.32 to $ 68.88 a barrel, while US crude oil futures rose $ 1.20 to $ 65.69 a barrel.
Gold fell 1% on Yellen’s remarks as rate hikes increase the opportunity cost of owning the interest-free precious metal.
US gold futures fell 0.9% to $ 1,776 an ounce.
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