Chinese authorities express concerns over the risk of asset bubbles in foreign markets
Wall Street stocks rallied during the first trading session of March, as the 10-year U.S. Treasury note yield continued to correct lower, dipping to a session low of 1.41%, off its high of 1.6% seen last week. Vaccination and stimulus optimism coupled with fresh strong economic data added to the upbeat tone among investors. February ISM manufacturing PMI printed at 60.8 versus a forecast of 58.8, hitting its highest level since 2018. As a result, the S&P 500 rose 2.38%, the Dow Jones Industrial Average gained nearly 2%, while the Nasdaq Composite jumped 3%.
Meanwhile, Asian markets were mostly lower on Tuesday as investor sentiment turned sour after the Chinese authorities expressed concerns over the risk of asset bubbles in foreign markets. As such, the MSCI’s broadest index of Asia-Pacific shares outside Japan had to give up early gains, to slip 0.33%. The S&P/ASX 200 index fell 0.4% after the RBA’s decision to stand pat on interest rates, as expected.
In Europe, equities managed to reenter the green territory following a negative open. The Stoxx 600 that ended yesterday’s session up by 1.8%, was around the flatline in early trade as US Treasury yields continue to retreat from their highs seen last week. On the negative side, German retail sales fell 4.5% on the month in January after a decline of 9.1% in the previous month.
The greenback extends its strong rebound on Tuesday, moving to four-week highs around 91.30 during the European hours in a context of the solid pace of the vaccine rollout in the United States as well as the expected higher inflation in the next months. Strong manufacturing data adding to the upbeat tone surrounding the greenback as well. As such, EURUSD has eroded 1.2000 for the first time in nearly a month and could now target this year’s lows around 1.1950.