Home ›› 13 Apr 2022 ›› Stock
World stocks slipped to their lowest levels in almost a month, the dollar held firm and selling again gripped the world's biggest bond markets on Tuesday with data expected to show annual US inflation rising at its fastest pace in 40 years.
Oil prices jumped over 4 per cent as Shanghai's relaxation of some COVID-19 restrictions eased concerns about Chinese demand and as oil-producing group OPEC warned it would be impossible to replace potential supply losses from Russia.
With US 10-year Treasury yields rising to new highs above 2.80 per cent , levels last seen late 2018, sentiment was weighed down by unease that an aggressive policy response to inflation from the Federal Reserve could undermine economic growth.
European shares were down 0.5 per cent , Japan's blue-chip Nikkei stock index shed 1.81 per cent and trade in US equity futures was mixed.
Deutsche Bank and Commerzbank shares fell sharply after the previous day's sale of more than 5per cent in both of Germany's top two lenders by an undisclosed investor.
That all left MSCI's world equity index flagging at its lowest levels in almost a month.
Economists polled by Reuters forecast the US consumer price index (CPI) would post an 8.4 per cent year-over-year increase in March, versus a 7.9 per cent rise a month earlier.
"Markets have decided that central banks are late and need to do more to tame inflation, and moderate volatility in equities is not enough to stop this," said Nordea chief analyst Jan von Gerich. "The reason for the wobble in equity markets is higher rates and geopolitics."
US 10-year Treasury yields pulled back from their highs. Still, they are up almost 45 basis points so far this month.
More disconcerting for equities is the move in real or inflation adjusted yields, with the yield on the 10-year US Treasury Inflation-Protected Securities (TIPS) approaching 0 per cent .
In Europe, German Bund yields climbed to almost 0.88 per cent , their highest level since 2015, British gilt yields rose to fresh multi-year highs.
Germany's ZEW economic research institute said its economic sentiment index fell to -41.0 points from -39.3 in March, declining less than expected.
Strong dollar
Higher Treasury yields supported the dollar.
The dollar index, a measure of the greenback's value against six peers, was back above 100 to touch its highest level in almost two years.
The dollar was a touch firmer at 125.58 yen, having risen on Monday to its highest since June 2015 at 125.77.
Japan's yen has been hurt by the Bank of Japan's commitment to maintaining ultra-easy policy even as the likes of the Fed embark on tightening monetary policy.
Latest warnings from Japanese policymakers, with Prime Minister Fumio Kishida stating on Tuesday that rapid currency moves are undesirable, failed to shore up the yen, which has shed over 3 per cent this month.
