Traders sold US Treasuries and stocks in pandemic beneficiaries as market nervousness over the Omicron coronavirus variant subsided and investors expected central banks to increase prices. interest rate.
The yield on the benchmark 10-year US Treasury bond, which moves inversely to the price of government debt, rose 0.06 percentage point to 1.684% after rising sharply on Monday.
The comparable yield on UK gilts rose 0.11 percentage point to 1.09%, as traders also bought stocks in UK and European companies whose fortunes are tied to economic growth and economic growth. loosening of restrictions on coronaviruses.
In U.S. stock markets, the tech-focused Nasdaq Composite fell 1.5% as shares of companies generally seen as beneficiaries of Covid-related restrictions declined. Chinese e-commerce group Pinduoduo fell by a tenth, while JD.com and Peloton both fell more than 6%. Zoom Video Communications and Okta fell almost 6%.
The Nasdaq had climbed 1.2% on Monday, with Apple becoming the first company to reach a market cap of $ 3 billion. However, analysts are increasingly concerned that the US stock markets are becoming too dependent on the performance of a group of large technology companies.
“The US economy appears to be deeply embedded in its economic cycle, which typically sees market leadership shrink to mega-cap stocks,” said Tan Kai Xian, analyst at Gavekal, arguing that rising US wages would exacerbate this. tendency.
“In times like this, companies operating with low margins are the most affected and can become loss-making. In contrast, companies with larger margins can continue to grow, ”he said.
“If Big Tech’s crutch has been driven out, then be careful,” said Patrick Spencer, vice president of equities at RW Baird. “The worry is that one of these really big tech stocks is going down and that will trigger a cascade of sales.”
The larger gauge of the S&P 500 fell 0.1% in trading in New York.
London’s blue-chip FTSE 100 stock index rose 1.6% as its multinational commodities and banking stocks outperformed. The UK’s more domestically focused FTSE 250 grew 1.8 percent, led by travel share.
European regional equity gauge Stoxx 600 added an additional 0.8% on Tuesday, building on a record set in the previous trading session.
“The global theme in the markets is that we have reached the peak of Covid,” said Roger Lee, UK equity strategy manager at Investec, after traders seized the first data suggesting that the highly transmissible variant Omicron could cause less severe disease than previous strains of the virus.
As investors have become more optimistic about the coronavirus, they have also raised their expectations of the increase in interest rates from the US Federal Reserve and other central banks, Lee added, making fixed income securities, such as bonds, are less attractive.
“If this is the last step for Covid, rates must rise because inflation must be contained,” he said. The rise in consumer prices in the United States is at its fastest annual rate since 1982.
In Asian stock markets, Tokyo’s Nikkei 225 closed up 1.8%, while Hong Kong’s Hang Seng index was flat.
Brent crude, the benchmark for oil, rose 0.9% to $ 79.68 a barrel after producer group Opec + agreed to increase production.