International Development News
Development News Edition

GLOBAL MARKETS-Trade nerves, bond yields and $80 oil buffet stocks

GLOBAL MARKETS-Trade nerves, bond yields and $80 oil buffet stocks

World stocks struggled to make headway on Tuesday after another round of U.S.-China tariffs kicked in and investors' nerves were frayed by rising expectations of central bank rate hikes and oil prices near four-year highs.

Following falls across Asian share markets, European bourses opened firmer, with a pan-European index up 0.2 percent. MSCI's main index of world stocks traded flat, though it is holding just under six-month highs hit earlier this month.

Beijing and Washington have imposed new tariffs on each other's goods and Chinese Vice Commerce Minister Wang Shouwen on Tuesday accused the United States of putting "a knife to China's neck".

Neither side appears ready for compromise, worrying investors the conflict is fast-becoming a protracted battle that will chill investment and hurt global trade.

The developments pushed Wall Street lower on Monday though futures indicated a slightly higher open.

"Markets have tried hard to shrug off the implications of an escalating trade spat on global trade and growth but this is becoming harder with each fresh round of tariffs and will slowly but surely take its toll on investor sentiment," Jasper Lawler, head of Research at London Capital Group, said.

There are other big worries for investors too, not least the timing and pace of central bank policy tightening.

While the U.S. Federal Reserve will almost certainly hike rates for a third time in 2018 this week, European Central Bank President Mario Draghi on Monday raised expectations the euro zone will also start to normalize policy over the coming year by referring to 'relatively vigorous' underlying inflation and brisk wage growth.

That pushed German 10-year bond yields to four-month highs above 0.5 percent, while yields also rose across the euro bloc with money markets now pricing a rate rise by the ECB next September. That's a marked change from a few weeks ago when a move was only expected by December 2019.

U.S. 10-year Treasury yields too rose, touching a new four-month high above 3.10 percent.

Goldman Sachs analysts noted a change in how markets were viewing rising bond yields -- having considered them a signal of improving growth and hence a positive for equities, higher bond yields were becoming attractive in their own right, they said.

"With U.S. 10-year bond yield above 3 percent and U.S. real yields close to 1 percent, the risk, especially to equities from rates, is now back in focus," they told clients in a note.

"We think the bar for investing in risky assets is rising as returns on safer assets are becoming more attractive."

Currency markets were mostly quiet as investors watched from the sidelines before the Fed meeting.

The euro eked out a small rise to $1.177 after rising above $1.18 after Draghi's comments on inflation while the dollar index was flat having inched off two-month lows hit at the end of last week.

The dollar's three percent reversal since mid-August has given some respite to emerging markets in recent days but MSCI's emerging equity index slipped 0.4 percent while most currencies also weakened, anticipating a hawkish tone from the Fed.

The yuan was a touch weaker as most investors expect Chinese authorities to not follow the Fed in raising rates.

Oil prices are also becoming a concern. They surged more than three percent on Monday after Russia and OPEC leader Saudi Arabia resisted pressure to raise crude output to offset the expected hit to supply from U.S. sanctions against Iran.

Brent crude futures rose to as high as $81.69 a barrel on Tuesday, a level not seen since November 2014.



'No escape from telephones', this 1953 prediction actually comes true

In 1953, a telephone company chief predicted that therell be no escape from telephones in the future....

With Ayodhya verdict, CJI starts clearing high profile pending cases

Ending all the speculations, the Chief Justice of India Mr. Ranjan Gogoi who is due to retire on November 17 decided to deliver the verdict in Ayodya dispute at 10.30 am on Saturday which is not a working day for the Supreme Court. This is ...

How partnerships and collaborations could enhance teacher training

Monica Malhotra Kandhari, Managing Director, MBD Group shares her views on public private partnership and collaborations in education sector. She supports her propositions with her organisations success stories....

Fixed Test centers would facelift level of WTC in India

The venues for the test matches in India should be fixed so that World Test Championship matches remain fair....


Latest News

Hong Kong court rules ban on face masks unconstitutional

Hong Kongs High Court ruled on Monday that a British colonial-era emergency law revived by the government to ban protesters wearing face masks was unconstitutional.It said the law was incompatible with the Basic Law, the mini-constitution u...

Govt ready to discuss all issues in Winter Session of Parliament: PM

The government is ready to discuss all issues in the Winter Session of Parliament, Prime Minister Narendra Modi said on Monday. The winter session is from November 18 to December 13.During the session, which will be the last session of Parl...

MLA attacked at wedding in Karnataka

Congress MLA and former Karnataka Minister Tanveer Sait were attacked by a man, with a knife, at a wedding ceremony in Mysuru late on Sunday night, police said. Sait, the Narasimharaja constituency MLA, was immediately rushed to a hospital ...

'Week of Italian cuisine in the world' in city

To promote Italys gastronomic culture abroad, a Week of Italian cuisine in the world is being held here from Monday. The seven-day event will exhibit Italian food especially its quality and excellence as the cuisine is one of the essential ...

Give Feedback