NEW YORK, May 5 ― World equity indexes slid and US Treasury yields fell yesterday as low trading volume, a lull in economic news and lack of a catalyst to lift stocks higher sparked a sell-off by investors worried further upside in markets is limited.
The tech-rich Nasdaq fell 1.9 per cent, its biggest single-day decline in almost six weeks, while the yield on 10-year Treasury notes fell to a low of 1.557 per cent, a slide that normally would push technology shares higher on lower financing costs.
A surge in commodity prices bucked the downdraft in equity markets, helping spur talk of rising inflation, while the dollar rose after US Treasury Secretary Janet Yellen said interest rates may need to rise to prevent overheating the US economy. Yellen later downplayed inflation and rate hike concerns.
The Refinitiv/CoreCommodity CRB Index traded near three-year highs as commodities rallied on investor bets that demand will grow as economies reopen.
Investors sold the high-flying tech-related stocks that have doubled the value of the Nasdaq since March 2020 lows, and bought government debt, pushing yields lower.
Apple Inc, Amazon.com Inc and Microsoft Corp led the decline on Nasdaq and the S&P 500.
“There's not a lot of conviction among traders of which way markets should go from here,” said Patrick Leary, chief market strategist and senior trader at Incapital. “We've priced in a great amount of reopening optimism.”
MSCI's benchmark for global equity markets fell 0.81 per cent to close at 697.60.
On Wall Street, the Dow Jones Industrial Average rose 0.06 per cent, the S&P 500 lost 0.67 per cent and the Nasdaq Composite dropped 1.88 per cent.
Economically sensitive value stocks eked out a gain of 0.04 per cent, outperforming a 1.6 per cent slide in growth stocks. After yesterday's slide, the Russell 1000 Value Total Return Index has nearly tripled the performance of the Russell 1000 Growth Total Return Index so far this year.
European tech stocks plunged 3.8 per cent in their worst day since late October. Germany's bourse shed 2.5 per cent, the most in Europe, due to its high composition of tech stocks.
Chipmaker Infineon fell 5.9 per cent, among the top drags on the German index, after the company said automotive supply constraints would only ease in the second half, with lost volumes likely to be made up in 2022.
Skepticism crept into the Treasury market that upcoming economic data might not be as stellar as the market has priced in, keeping a damper on longer-dated bonds. The benchmark 10-year Treasury note last yielded 1.587 per cent.
In currency markets, the dollar clawed back some ground to partially unwind last month's long decline as investors squared up positions ahead of monthly payrolls data due at the end of the week.
The dollar index rose 0.289 per cent, with the euro down 0.36 per cent at US$1.2018 (RM4.94). The Japanese yen weakened 0.19 per cent versus the greenback at 109.28 per dollar.
Signs that the world's major central banks remain in no rush to reel in their massive stimulus programs kept 10-year U.S. Treasury yields under 1.65 per cent and Germany's Bund yields below 13-month highs.
Australia's central bank left its key interest rates at near zero overnight for a fifth straight meeting and pledged to keep its policies super-supportive for a prolonged period.
Australia's S&P/ASX200 had risen 0.6 per cent and Hong Kong had climbed 0.7 per cent in thin Asian trading due to holidays in both China and Japan.
Cryptocurrency ether powered to another record peak, nearing US$3,500, before paring gains to close 0.8 per cent lower.
Oil prices rose after more US states eased pandemic-related lockdowns and the European Union sought to attract travelers, though soaring Covid-19 cases in India capped gains.
Brent crude futures settled up US$1.32 at US$68.88 a barrel, while US crude futures rose US$1.20 to settle at US$65.69 a barrel.
Gold fell 1 per cent on Yellen's remarks as rising rates increase the opportunity cost of holding the non-interest bearing precious metal.
US gold futures settled down 0.9 per cent at US$1,776 an ounce. ― Reuters
