Left Menu
Development News Edition

GLOBAL MARKETS-Shares, bond yields perch at six-week highs

Reuters | Updated: 13-09-2019 17:48 IST | Created: 13-09-2019 17:45 IST
GLOBAL MARKETS-Shares, bond yields perch at six-week highs
Image Credit: Pixabay

World shares climbed to a six-week high alongside benchmark government bond yields on Friday, as markets cheered signs of progress in U.S.-China trade talks and another powerful slug of stimulus from the European Central Bank.

It was a bit of a groggy start in Europe after it emerged that not all of the ECB's member country's had wanted to restart its money-printing program. But news that China would spare some U.S. agricultural goods from tariffs helped global stocks add 0.3% and lifted Wall Street futures too.

The euro shuffled up to a two-week high as traders suspected the ECB may have now exhausted all ammunition of any worth, though a six-week low for the safe-haven Japanese yen and the pound back above $1.2450 for the first time since late July also caught the attention. "We have quite an interesting reaction to the ECB meeting with the sense of the pushback from the core countries, and that essentially that the ECB has now thrown its last cards in," said John Hardy, head of FX strategy at Saxo bank.

"It looks like we are also getting to some pretty interesting levels for yields. If the consolidation continues, at some point you have to question whether the easing (from the central banks) is actually there." U.S., Japanese and European long-dated bond yields were all at six-week highs. Ten-year U.S. Treasuries were offering almost 1.8% compared with just over 1.4% at the start of September, while Germany's Bunds settled at the new ECB deposit rate of -0.5%.

It was all built on revived risk appetite and after U.S. President Donald Trump had said on Thursday he was potentially open to an interim trade deal with China, although he stressed an "easy" agreement would not be possible. It would certainly help optimism in the near future through a new Reuters poll showed most economists believed the trade dispute would worsen or at best stay the same over the coming year.

In line with the main world stock indexes, Asian shares ended their week at a six-week high. Japan's Nikkei did even better and scored a 4-month peak, while Wall Street's S&P 500 had closed just short of its all-time closing high. As well as the boost from the Trump trade signals and the ECB's salvo of easing measures, sentiment had also been helped by a U.S. tax overhaul plan aimed at middle-income households next year.

"Risk assets should find further support from accommodative policies, which are set to remain in vogue for some time, and not just in Europe as seen in the global easing trend," said Esty Dwek, head of global market strategy at Natixis in Geneva, Switzerland.

EASY! EASY!

U.S. Fed funds rate futures now imply a 0.25 percentage point interest rate cut by the U.S. central bank next week but have effectively priced out any chance of a larger cut. The Fed will announce its policy on Wednesday, followed by the Bank of Japan (BOJ) on Thursday.

Sources told Reuters the BOJ is leaning towards standing pat next week if markets are calm but is brainstorming ways to deepen negative interest rates at a minimal cost. "I think a rally in stock prices will run out of steam soon. It's typical buy-on-rumor-sell-on-fact trade on central bank stimulus and will be over by the Fed and the BOJ's meetings," said Tatsushi Maeno, senior strategist at Okasan Asset Management.

Despite the rise in other economy-sensitive assets, oil prices were on course to post weekly losses. As well as continued worries about weakening demand, traders have begun speculating that the U.S. may ease sanctions on Iran after Trump ousted his hawkish national security adviser John Bolton this week.

Brent crude futures leveled out at $60.21 a barrel while U.S. West Texas Intermediate (WTI) crude hovered around $55. Gold ticked up to $1,503 an ounce.


TRENDING

OPINION / BLOG / INTERVIEW

Post-COVID-19 Nigeria needs a robust Health Management Information System to handle high disease burden

Nigeria is among a few countries that conceptualised a health management information system HMIS in the early 90s but implementation has been a challenge till date. Besides COVID-19, the country has a huge burden of communicable and non-com...

Morocco COVID-19 response: A fragile health system and the deteriorating situation

Learning from its European neighbors, Morocco imposed drastic measures from the initial stages of the COVID-19 outbreak to try to contain its spread. The strategy worked for a few months but the cases have surged after mid-June. In this sit...

COVID-19: Argentina’s health system inefficiencies exaggerate flaws of health information system

You can recover from a drop in the GDP, but you cant recover from death, was the straightforward mindset of Argentinas President Alberto Fernndez and defined the countrys response to COVID-19. The South American nation imposed a strict...

Rwanda’s COVID-19 response commendable but health information system needs improvement

Rwanda is consistently working to improve its health information system from many years. However, it is primarily dependent on the collection and reporting of health data on a monthly basis. Besides, evaluation studies on Rwandas HIS publis...

Videos

Latest News

Soccer-Wrexham subject of shock bid from Hollywood actor Reynolds and sitcom creator McElhenney

Actors Ryan Reynolds and Rob McElhenney are in talks to invest in Welsh side Wrexham, who play in the fifth tier of English soccer, the clubs supporters trust said on Wednesday. Canadian Reynolds, famed for starring in superhero comedy Dead...

White House will consider executive action to help airlines -Kudlow

White House economic adviser Larry Kudlow said on Wednesday the Trump administration will consider executive action to help airlines hurt by the economic impact of the coronavirus pandemic.We would like very much to help the airlines, Kudlo...

Canada will spend big to combat coronavirus, saying now is 'not the time for austerity'

Canadas Liberal government, insisting on Wednesday that this is not the time for austerity, promised major new investments and initiatives to help the country battle back from the coronavirus pandemic even as a new wave of infections looms....

President Ghani sets out ‘clear plan’ to advance UN values in Afghanistan

With the objective of self-reliance, moving away from donor relationships to mutually beneficial partnerships, he said that a democratically stable and prosperous Afghanistan will be an example of how our collective will can overcome the ...

Give Feedback