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World stocks rally as Treasury yields tumble

04/15/2021 | 05:22pm EDT
FILE PHOTO: A man stands on an overpass with an electronic board showing Shanghai and Shenzhen stock indexes in Shanghai

NEW YORK/LONDON (Reuters) - World stock markets extended a five-day run of fresh highs on Thursday, fueled by upbeat earnings and strong U.S. economic data that herald a solid recovery ahead, while Russian markets tumbled at the prospect of the harshest U.S. sanctions in years.

Major stock indexes posted record highs, including MSCI's global benchmark, Europe's broad STOXX 600, the Dow Industrials and the U.S. benchmark S&P 500, as bonds yields tumbled.

The 10-year U.S. Treasury note slid below 1.6% to yield 1.563%, a fall of 7.4 basis points that helped spur renewed buying of big tech stocks in the biggest single-day decline in the benchmark's yield in almost three months.

MSCI's all-country world index of equity performance in 50 countries, which is heavily weighted to Apple Inc, Microsoft Corp and Amazon.com Inc, jumped 0.89% and is now up 8.6% for the year.

Growth stocks regained their footing, rising 1.7% against a 0.6% gain in value names on Thursday, as measured by the Russell 1000 indexes.

The Dow Jones Industrial Average rose 0.9% and the S&P 500 advanced 1.11%. The Nasdaq Composite added 1.31%.

Unlike a month ago when markets feared inflation, the plunge in Treasury yields suggests investors from Japan and elsewhere in Asia see deflation in the longer term once stimulus is gone and U.S. growth normalizes, said Steven Ricchiuto, U.S. chief economist at Mizuho Securities USA LLC in New York.

"Once those steroids are no longer being provided, the economy's going to drop back to its trend and their point is, 'Well, how are you going to get out of this deflationary bias with the dollar remaining firm?'" Ricchiuto said.

The dollar index rebounded after touching a four-week low, up 0.06% as the euro fell 0.09% to $1.1967. The Japanese yen strengthened 0.19% versus the greenback.

U.S. retail sales rebounded 9.8% in March, the largest increase since May 2020, in a gain that pushed the level of sales 17.1% above its pre-pandemic level to a record high, the Commerce Department said.

Separately, the Labor Department said initial claims for state unemployment benefits fell to a seasonally adjusted 576,000 for the week ended April 10, the lowest level since mid-March 2020 and 124,000 below economists forecasts.

Investors are increasingly convinced that U.S. interest rates will stay low, whereas in Europe a deluge of debt issuance lifted German bond yields to four-week highs. [GVD/EUR]

A new set of U.S. sanctions to punish Russia for alleged interference in U.S. elections, cyber-hacking and other "malign" acts battered the ruble and Russian state bonds, but analysts said they will not have a significantly adverse impact.

The ruble dropped as much as 2% and last traded 1.05% lower.

Turkey's lira wobbled as the country's central bank hinted that it will look to cut interest rates under a new governor after the last one was sacked after hiking rates last month.

Overnight in Asia the Nikkei ended little changed and Hong Kong and China's main bourses finished 0.5%-0.6% in the red.

JPMorgan Asset Management said in a note it was trimming its overall emerging markets exposure once again, "mostly driven by a less sanguine outlook on EM Asia." The bank had already recommended selling EM currencies earlier in the week.

The Australian dollar hovered near three-week highs at $0.7716 after posting its biggest one-day percentage gain since Feb. 19 on Wednesday. Its New Zealand peer was upbeat at $0.7147, a level not seen since March 23.

Gold jumped to its highest in more than a month as Treasury yields retreated. U.S. gold futures settled 1.8% higher at $1,766.80 an ounce.

Oil prices held near a one-month high following the strong U.S. economic data and higher demand forecasts from the International Energy Agency.

Brent crude futures settled up 36 cents at $66.94 a barrel. U.S. crude futures rose 31 cents to settle at $63.46 a barrel.

Graphic: Russia and Ukraine risk gauges have been rising

(Reporting by Herbert Lash, additional reporting by Swati Pandey in Sydney; Editing by Kirsten Donovan, Nick Zieminski and Dan Grebler)

By Herbert Lash and Marc Jones


© Reuters 2021
Stocks mentioned in the article
ChangeLast1st jan.
AUSTRALIAN DOLLAR / BRITISH POUND (AUD/GBP) 0.03% 0.55002 Delayed Quote.-1.40%
AUSTRALIAN DOLLAR / CANADIAN DOLLAR (AUD/CAD) 0.03% 0.94026 Delayed Quote.-3.09%
AUSTRALIAN DOLLAR / EURO (AUD/EUR) 0.02% 0.63957 Delayed Quote.2.45%
AUSTRALIAN DOLLAR / JAPANESE YEN (AUD/JPY) 0.14% 84.711 Delayed Quote.7.31%
AUSTRALIAN DOLLAR / NEW ZEALAND DOLLAR (AUD/NZD) 0.11% 1.07666 Delayed Quote.0.81%
AUSTRALIAN DOLLAR / SWISS FRANC (AUD/CHF) 0.07% 0.70017 Delayed Quote.4.05%
AUSTRALIAN DOLLAR / US DOLLAR (AUD/USD) 0.04% 0.7729 Delayed Quote.1.87%
BITCOIN - EURO 0.88% 41289.72 Real-time Quote.79.37%
BITCOIN - UNITED STATES DOLLAR 1.05% 50020.79 Real-time Quote.76.88%
BRITISH POUND / AUSTRALIAN DOLLAR (GBP/AUD) -0.05% 1.81765 Delayed Quote.1.58%
BRITISH POUND / CANADIAN DOLLAR (GBP/CAD) -0.02% 1.70915 Delayed Quote.-1.61%
BRITISH POUND / EURO (GBP/EUR) -0.03% 1.16269 Delayed Quote.4.01%
BRITISH POUND / JAPANESE YEN (GBP/JPY) 0.09% 153.972 Delayed Quote.8.92%
BRITISH POUND / NEW ZEALAND DOLLAR (GBP/NZD) 0.05% 1.95682 Delayed Quote.2.37%
BRITISH POUND / SWISS FRANC (GBP/CHF) 0.01% 1.27263 Delayed Quote.5.70%
BRITISH POUND / US DOLLAR (GBP/USD) 0.01% 1.40493 Delayed Quote.3.37%
CANADIAN DOLLAR / AUSTRALIAN DOLLAR (CAD/AUD) -0.02% 1.063547 Delayed Quote.3.18%
CANADIAN DOLLAR / BRITISH POUND (CAD/GBP) 0.01% 0.585093 Delayed Quote.1.64%
CANADIAN DOLLAR / EURO (CAD/EUR) -0.01% 0.680388 Delayed Quote.5.76%
CANADIAN DOLLAR / US DOLLAR (CAD/USD) 0.02% 0.82172 Delayed Quote.5.27%
COINBASE GLOBAL, INC. -6.53% 265.1 Delayed Quote.0.00%
DJ INDUSTRIAL 1.29% 34021.45 Delayed Quote.11.97%
EURO / AUSTRALIAN DOLLAR (EUR/AUD) -0.03% 1.56304 Delayed Quote.-2.35%
EURO / BRITISH POUND (EUR/GBP) 0.03% 0.85993 Delayed Quote.-3.82%
EURO / US DOLLAR (EUR/USD) 0.04% 1.20818 Delayed Quote.-0.57%
GOLD -0.05% 1824.015 Delayed Quote.-3.29%
INDIAN RUPEE / AUSTRALIAN DOLLAR (INR/AUD) 0.08% 0.017636 Delayed Quote.-2.29%
INDIAN RUPEE / BRITISH POUND (INR/GBP) -0.01% 0.009693 Delayed Quote.-3.77%
INDIAN RUPEE / EURO (INR/EUR) 0.00% 0.011269 Delayed Quote.0.13%
INDIAN RUPEE / US DOLLAR (INR/USD) 0.00% 0.013617 Delayed Quote.-0.45%
JPMORGAN CHASE & CO. 2.57% 161.5 Delayed Quote.27.10%
KOSPI COMPOSITE INDEX -1.35% 3117.09 Real-time Quote.8.59%
LONDON BRENT OIL -0.25% 66.8 Delayed Quote.32.80%
NASDAQ 100 0.83% 13109.146878 Delayed Quote.3.59%
NASDAQ COMP. 0.72% 13124.988183 Delayed Quote.1.11%
NEW ZEALAND DOLLAR / US DOLLAR (NZD/USD) -0.06% 0.71785 Delayed Quote.1.15%
NIKKEI 225 -2.49% 27448.01 Real-time Quote.2.56%
S&P 500 1.22% 4112.5 Delayed Quote.10.54%
S&P GSCI CRUDE OIL INDEX -2.50% 349.0627 Delayed Quote.35.30%
STOXX EUROPE 600 -0.14% 437.32 Delayed Quote.9.75%
THE GOLDMAN SACHS GROUP, INC. 1.24% 358.81 Delayed Quote.36.06%
US DOLLAR / AUSTRALIAN DOLLAR (USD/AUD) -0.05% 1.293879 Delayed Quote.-1.84%
US DOLLAR / BRITISH POUND (USD/GBP) -0.02% 0.711825 Delayed Quote.-3.26%
US DOLLAR / EURO (USD/EUR) -0.04% 0.827815 Delayed Quote.0.57%
WELLS FARGO & COMPANY 1.67% 46.4 Delayed Quote.53.74%
WTI -0.24% 63.649 Delayed Quote.35.96%
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