World markets remained edgy on Thursday, with shares eking out gains amid concern over the global economic outlook and with U.S. bond yields at four-year highs after breaking above the psychologically significant 3 percent line this week.
Investors will be watching the
European Central Bank later for clues on when it will signal an end-date
for its 2.55 trillion euro ($3.2 trillion) asset-buying program.
enjoyed strong gains in South Korea, where electronics conglomerate and
key tech bellwether Samsung posted record quarterly profits, while
Japan’s Nikkei added 0.5 percent.
On Wednesday, the U.S. Dow Jones
benchmark snapped a five-day losing streak thanks to more strong
corporate earnings. While the Nasdaq tech index fell again, it could
benefit from a strong after-market rise in Facebook which posted
Equity futures were tipping Nasdaq to open 0.4 percent higher while the other two indexes are seen only marginally higher.
the momentum fizzed in Europe where shares flatlined near one-week
lows, as a mixed set of earnings weighed, including a 79 percent profit
drop at Deutsche Bank.
All that kept MSCI’s all-country equity
index only marginally in the black after five straight days of
losses.Investors remain cautious even though company after company,
especially in the United States, has posted record-shattering first
quarter results. Instead, signs of ebbing economic growth momentum are
preying on their minds, alongside higher global borrowing costs that
could dent future earnings.
Oil’s 11 percent rise this year, on top of last year’s 18 percent jump, is adding to inflation fears.
music is still playing and we are still dancing, but we are reducing
risk,” said Pau Morilla-Giner, chief investment officer at London &
“The worry is about an overheating, leading to a rise in inflation, higher interest rates which bring on a textbook recession.”
Treasury yields, the reference rate for global borrowing, extended
their yield surge. Having risen around 25 basis points since
early-April, the yield is a whisker off the 3.041 percent mark that
would be a new four-year high.
The yield has risen for six straight days - the longest upward run since September 2017, according to Reuters data.
alongside the rise in commodity prices has led companies such as
Alphabet to warn of surging costs while heavy equipment maker,
Caterpillar said its buoyant first-quarter earnings could be the “high
While 81.2 percent of U.S. earnings have beaten
consensus estimates and Thomson Reuters data projects first-quarter
earnings growth at 22 percent, investors fear such warnings from other
“We have been on a real high with corporate
profitability so people got psyched up about those numbers getting even
better,” said Peter Lowman, CIO of UK-based wealth manager Investment
“But with Treasury yields rising, people are worrying we
may be peaking on profits, or if GDP growth is peaking and we are now in
a situation where markets are getting very nervous,” he said, noting
the U.S. Federal Reserve appeared to be in no mood to brake its
The European Central Bank is expected to keep
policy unchanged at its meeting ending on Thursday and will likely play
down the recent softness in the euro economy.
Euro zone bond
yields, swept up in the Treasury market momentum, inched down from
multi-week highs before the meeting, and the euro firmed off eight-week
lows against the dollar.
Money-market pricing suggests investors
expect the ECB to deliver a rate hike by June 2019, having pushed back
expectations from early next year.
Credit Agricole strategist
Orlando Green said markets expected ECB President Mario Draghi to focus
on the softer recent data and address concerns about euro strength and
global trade tensions.
“The risk is that he is less dovish than expected,” Green added.
could provide a lift to the euro which has sold off in recent days
against the dollar to approach its March 1 level of $1.2154 — weakest
since mid-January. It fetched $1.21775 before the ECB meeting.
central bank meanwhile remained dovish at a policy meeting, pushing the
crown to the lowest versus the euro since late-2009.
the dollar has powered higher in recent weeks to hit 3-1/2 month highs
against a basket of G10 peers, supported by rising debt yields.
the yen it traded this week at 109.490, its strongest since Feb. 8.