World Shares Rebound

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World shares climbed half a percent on Monday, following last week’s sell-off on Wall Street which aided in lifting both Asian and European markets. The MSCI all-country index was able to move away from four-month lows, while European shares gained 1.4 percent.

Wall Street’s equity “fear gauge”, was at 26.5 percent, lower than Friday’s 29 percent close. The index was more almost double during last week’s chaos and its current levels are still above its 11 percent average, suggesting that investors are still showing caution.

The continued increase in bond yields is strengthening worries that there is more volatility to come. Ten-year Treasury yields reached fresh four-year highs around 2.90 percent, while German yields, Europe’s benchmark, lingered just under last week’s 2-1/2-year high of 0.8 percent.

“People are nervous after the shock of the past week but it doesn’t feel like there is a crisis around the corner. But never say never,” said Grant Lewis, head of research at a financial firm. “Even at 2.90 percent, 10-year Treasury yields are still low,” Lewis added.

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According to data from the U.S. Commodity Futures Trading Commission, equity funds had withdrawn from long positions in S&P 500 futures, protecting themselves from a market that has lost nearly 8 percent since the end of January. U.S. equity futures gained 1 percent.


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In China, banks continued a record amount of new yuan loans in January. This not only supports Chinese growth but also reinforces global liquidity.

U.S. consumer price inflation is due Wednesday, and analysts forecast the rate to have slowed to 1.9 percent in January, while the core measure is seen dropping down to 1.7 percent. A higher-than-expected figure could spark another selloff in stocks and bonds, adding to a global decline.

On Monday, the U.S. dollar fell 0.2 percent lower versus a basket of currencies. The euro gained 0.2 percent, after shedding 1.8 percent last week. The yen moved away from last week’s five-month highs.

Brent crude futures gained back two percent after last week’s 9 percent drop, copper rebounded from two-month lows and gold rose 0.2 percent.


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