Daily summary: Global stocks slide as bond yields rise

6:52 PM February 22, 2021
  • Lagarde says ECB is closely monitoring bond yields
  • Boris Johnson unveils lockdown exit plan
  • US tech stocks extend losses

European indices finished today's session slightly lower amid signs that ECB policymakers are concerned about rising bond yields in recent weeks. President Lagarde said that ECB is closely monitoring the evolution of longer-term yields, and that it will continue to support all sectors of the economy by preserving favorable financing conditions over pandemic period. Investors worry that rising bond yields and higher inflation expectations, could force central banks to start tightening policy sooner than previously assumed. UK Prime Minister Boris Johnson provided details of the plans to ease restrictions on the UK economy, saying his roadmap will guide the government “cautiously but irreversibly” to lifting the lockdown. DAX 30 fell 0.3%, CAC40 lost 0.11% and FTSE100 finished 0.18% lower.

US indices launched today's session sharply lower amid fears that the President's Biden 1.9 trillion stimulus package could lead to higher inflation, leading to higher borrowing costs and higher input costs for companies. Recent sell-off was triggered by a sharp move higher in Treasury bond yields. The 10-year Treasury yield broke fresh 1-year highs before retreating and the gap between 5 and 30-year yields touched the highest level in more than five years. Some equity investors fear that high Treasury could especially hurt high-growth companies reliant on easy borrowing while diminishing the relative appeal of stocks. Tesla shares slid 5% following a 4% decline last week. Big Tech stocks came under pressure as Apple, Amazon, Microsoft, Netflix and Alphabet all traded at least 1% lower.

Oil is trading higher, with WT trading slightly below $61 a barrel and Brent about $64.65 a barrel as it  may need several weeks to resume normal operations in Texas following last week's deep freeze weather. Elsewhere gold futures rose 1.50% to  $ 1,810.00 / oz, while silver is trading 2.7% higher near $ 28.00 / oz helped by broad dollar weakness. Bitcoin plunged nearly 17% and copper jumped above $9,000 a metric ton for the first time in nine years, taking another step closer to an all-time high set in 2011 as investors expected that supply tightness will increase as the world recovers from the pandemic.

Copper price jumped above major resistance at $9000 and is approaching peak from February 2011 at $10200. Source: xStation5

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