LONDON: Worries about lofty US bond yields hit global shares on Thursday as investors waited to see if Federal Reserve Chair Jerome Powell would address concerns about a rapid rise in long-term borrowing costs.
The spectre of high US bond yields also undermined low-yielding, safe-haven assets, such as the yen, the Swiss franc and gold.
Benchmark 10-year US Treasuries were at 1.458 per cent. They earlier touched their highest levels since a one-year high of 1.614 per cent set last week on bets on a strong economic recovery aided by government stimulus and progress in vaccination programmes.
“Equities and yields continue to both drive and thwart one another,” said James Athey, investment director at Aberdeen Standard Investments.
“Fed speech continues to express very little concern and certainly is not suggestive of any imminent action to curb the rise in yields. The Powell speech today is hotly anticipated, but I fear more out of hope than rational expectation.”
The Euro STOXX 600 was down 0.6 per cent and London’s FTSE 0.8 per cent lower. The MSCI world equity index, which tracks shares in 49 countries, lost 0.6 per cent, its third day running of losses.
The MSCI’s ex-Japan Asian-Pacific shares lost 2 per cent, while Japan’s Nikkei fell 2.1 per cent to its lowest since February 5.
E-mini S&P futures slipped 0.2 per cent. Futures for the Nasdaq, the leader of the post-pandemic rally, fell 0.3 per cent, earlier hitting a two-month low.
Tech shares are vulnerable because their lofty valuation has been supported by expectations of a prolonged period of low interest rates.
— AFP
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