Global Markets: Shares drop for third day, yields soar as markets brace for rate hikes

Sun Hung Kai Properties

28/09/2021 09:36

* Graphic: Global asset performance http://tmsnrt.rs/2yaDPgn
    * Graphic: World FX rates http://tmsnrt.rs/2egbfVh

    By Ritvik Carvalho
    LONDON, Sept 28 (Reuters) - Global shares fell for a third
successive day on Wednesday, while bond yields on both sides of
the Atlantic soared on anxiety over when central banks might
raise interest rates.
    MSCI's All Country World Index, which tracks shares across
49 countries, was down 0.3% on the day after the start of
trading in Europe.  .MIWD00000PUS 
    The 10-year U.S. Treasury yield hit 1.5444%, its highest
level since Jun. 17, pulling up euro zone bond yields in its
wake. Two-year Treasury yields surged to 18-month highs.  US/ 
 GVD/EUR   urn:newsml:reuters.com:*:nL1N2QU05O
    A market measure of euro zone inflation expectations jumped
to 1.81%, its highest level in two weeks.  EUIL5YF5Y=R 
    Surging yields pressured high-growth technology shares at
the start of trading in Europe while fresh signs of a slowdown
in China's economy also weighed on investor sentiment, pushing
the pan-European STOXX 600 index down over 1%.  .EU 
    Britain's FTSE 100 index  .FTSE  fell 0.5%, while Germany's
DAX  .GDAXI  fell 0.8%. France's CAC 40  .FCHI  fell 1.1% and
Italy's FTSE MIB index  .FTSEMIB  slipped 0.6%.
    "The global equity market is having difficulties rising in a
wall of worries as the energy crunch and re-pricing of the U.S.
(and EU over the month) is potentially changing the timing and
speed of future rate increases or at least tapering," said
Sebastien Galy, senior macro strategist at Nordea Asset
Management.
    Rising yields also boosted the dollar, with the index that
measures the greenback's strength rising to a five-week high.
The Japanese yen fell against the dollar and the euro as rising
yields made the currencies more attractive to Japanese buyers.
 FRX/       
    Earlier in Asia, shares were mixed across regions as the
fallout of Chinese property developer Evergrande's debt crisis
and a widening power shortage in China weighed on sentiment. 
    Australia's benchmark S&P/ASX200 index  .AXJO  closed 1.47%
lower, led by a sell-off in healthcare and technology stocks,
while Japan's Nikkei  .N225  was down 0.2% after halving its
initial losses.
    China's blue chip index CSI300  .CSI300  edged up 0.1%, as
Hong Kong's Hang Seng Index  .HSI  gained 1.34%, snapping a
recent run of negative sessions.
    During Asian trade, Brent crude oil hit $80 a barrel for the
first time in three years, driven by regional economies
beginning to reopen from the COVID-19 pandemic and supply
concerns.  O/R 
    
    SOME 'POSITIVE NEWS' IN PROPERTY SECTOR
    Hong Kong and mainland China's major property indices rose
between 3% to 8% after the People's Bank of China (OBOC) pledged
to support homeowners.
    "There has been positive news for the property sector, and
markets are digesting that after all of the negative news flow
of the past few days," Tammy Leung, Everbright Sun Hung Kai
strateigst said.
    Investors remain on edge over the future of Evergrande,
which failed to meet a deadline to make an interest payment to
offshore bond holders.
    Evergrande has 30 days to make the payment before it falls
into default and Shenzen authorities are now investigating the
company's wealth management unit.  urn:newsml:reuters.com:*:nL1N2QT0OI
    Gold prices fell to a 1-1/2-month low on Tuesday, with spot
gold  XAU=  hitting its lowest level since Aug. 11 at $1,735.40
per ounce.  GOL/ 
    London nickel and tin prices extended losses into a second
session on Tuesday, as widening power cuts in top metals
consumer China cause worries over downstream demand.  MET/L 
    Analysts said the blackouts could affect China's listed
industrial stocks.
    "What we see in China with the developers and the blackouts
is going to be a negative weight on the Asian markets," Tai Hui,
JPMorgan Asset Management's Asian chief market strategist told
Reuters.
    "Most people are trying to work out the potential contagion
effect with Evergrande and how far and wide it could go. We keep
monitoring the policy response and we have started to see some
shift towards supporting homebuyers which is what we have been
expecting."
    Commonwealth Bank economists estimate two months of power
rationing in key provinces in China could shave 0.1 percentage
points off this year's economic growth, and 0.3 percentage
points off next year's.
    "Markets have been jittery amid focus on China’s regulatory
clampdown and the prospect of the Federal Reserve tapering its
asset purchases," BlackRock Investment Institute said in its
global weekly commentary. 
    "We believe the path for further gains in risk assets has
narrowed after an extended run higher, warranting a selective
approach, but we reaffirm our tactical pro-risk stance."
    It said it was shifting its view to a 'modest' overweight in
Chinese assets, in the context of very small client allocations
to the asset class.


    
    
    

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Emerging markets     http://tmsnrt.rs/2ihRugV
Global asset performance     http://tmsnrt.rs/2yaDPgn
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 (Reporting by Ritvik Carvalho; additional reporting by Sujata
Rao in London and Scott Murdoch in Hong Kong, editing by Timothy
Heritage)
 ((Ritvik.Carvalho@thomsonreuters.com; +44 2075429406; Reuters
Messaging: ritvik.carvalho.thomsonreuters@reuters.net; Twitter
@ritvikcarvalho))