{"id":64179,"date":"2018-04-26T11:48:46","date_gmt":"2018-04-26T11:48:46","guid":{"rendered":"https:\/\/www.biphoo.com\/bipnews\/?p=64179"},"modified":"2018-04-26T11:48:46","modified_gmt":"2018-04-26T11:48:46","slug":"world-stocks-edgy-as-rising-bond-yields-raise-fears-for-growth-and-profits","status":"publish","type":"post","link":"https:\/\/www.biphoo.com\/bipnews\/business\/world-stocks-edgy-as-rising-bond-yields-raise-fears-for-growth-and-profits.html","title":{"rendered":"World stocks edgy as rising bond yields raise fears for growth and profits"},"content":{"rendered":"

World stocks edgy as rising bond yields raise fears for growth and profits<\/span><\/strong><\/span><\/h2>\n

Investors will be watching the European Central Bank later for clues on when it will signal an end-date for its 2.55 trillion euro ($3.2 trillion) asset-buying program.<\/span><\/p>\n

Equities enjoyed strong gains in South Korea, where electronics conglomerate and key tech bellwether Samsung posted record quarterly profits, while Japan\u2019s Nikkei added 0.5 percent.<\/span><\/p>\n

On Wednesday, the U.S. Dow Jones benchmark snapped a five-day losing streak thanks to more strong corporate earnings. While the Nasdaq tech index fell again, it could benefit from a strong after-market rise in Facebook which posted forecast-beating results.<\/span><\/p>\n

Equity futures were tipping Nasdaq to open 0.4 percent higher while the other two indexes are seen only marginally higher.<\/span><\/p>\n

But the momentum fizzed in Europe where shares flatlined near one-week lows, as a mixed set of earnings weighed, including a 79 percent profit drop at Deutsche Bank.<\/span><\/p>\n

All that kept MSCI\u2019s all-country equity index only marginally in the black after five straight days of losses.<\/span><\/p>\n

Investors remain cautious even though company after company, especially in the United States, has posted record-shattering first quarter results. Instead, signs of ebbing economic growth momentum are preying on their minds, alongside higher global borrowing costs that could dent future earnings.<\/span><\/p>\n

Oil\u2019s 11 percent rise this year, on top of last year\u2019s 18 percent jump, is adding to inflation fears.<\/span><\/p>\n

\u201cThe music is still playing and we are still dancing, but we are reducing risk,\u201d said Pau Morilla-Giner, chief investment officer at London & Capital.<\/span><\/p>\n

\u201cThe worry is about an overheating, leading to a rise in inflation, higher interest rates which bring on a textbook recession.\u201d<\/span><\/p>\n

Ten-year Treasury yields, the reference rate for global borrowing, extended their yield surge. Having risen around 25 basis points since early-April, the yield is a whisker off the 3.041 percent mark that would be a new four-year high.<\/span><\/p>\n

The yield has risen for six straight days – the longest upward run since September 2017, according to Reuters data.<\/span><\/p>\n

That, alongside the rise in commodity prices has led companies such as Alphabet to warn of surging costs while heavy equipment maker, Caterpillar said its buoyant first-quarter earnings could be the \u201chigh water mark\u201d.<\/span><\/p>\n

While 81.2 percent of U.S. earnings have beaten consensus estimates and Thomson Reuters data projects first-quarter earnings growth at 22 percent, investors fear such warnings from other companies.<\/span><\/p>\n

\u201cWe have been on a real high with corporate profitability so people got psyched up about those numbers getting even better,\u201d said Peter Lowman, CIO of UK-based wealth manager Investment Quorum.<\/span><\/p>\n

\u201cBut with Treasury yields rising, people are worrying we may be peaking on profits, or if GDP growth is peaking and we are now in a situation where markets are getting very nervous,\u201d he said, noting the U.S. Federal Reserve appeared to be in no mood to brake its rate-hike program.<\/span><\/p>\n

The European Central Bank is expected to keep policy unchanged at its meeting ending on Thursday and will likely play down the recent softness in the euro economy.<\/span><\/p>\n

Euro zone bond yields, swept up in the Treasury market momentum, inched down from multi-week highs before the meeting, and the euro firmed off eight-week lows against the dollar <EUR\/GVD> .<\/span><\/p>\n

Money-market pricing suggests investors expect the ECB to deliver a rate hike by June 2019, having pushed back expectations from early next year.<\/span><\/p>\n

Credit Agricole strategist Orlando Green said markets expected ECB President Mario Draghi to focus on the softer recent data and address concerns about euro strength and global trade tensions.<\/span><\/p>\n

\u201cThe risk is that he is less dovish than expected,\u201d Green added.<\/span><\/p>\n

That could provide a lift to the euro which has sold off in recent days against the dollar to approach its March 1 level of $1.2154 \u2014 weakest since mid-January. It fetched $1.21775 before the ECB meeting.<\/span><\/p>\n

Sweden\u2019s central bank meanwhile remained dovish at a policy meeting, pushing the crown to the lowest versus the euro since late-2009.<\/span><\/p>\n

In contrast, the dollar has powered higher in recent weeks to hit 3-1\/2 month highs against a basket of G10 peers, supported by rising debt yields. Against the yen it traded this week at 109.490, its strongest since Feb. 8.<\/span><\/p>\n

Source:-https:\/\/www.reuters.com\/article\/us-global-markets\/world-stocks-edgy-as-rising-bond-yields-raise-fears-for-growth-and-profits-idUSKBN1HX02H<\/span><\/p>\n

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