World shares steadied near lows on Tuesday as worries that rising oil prices will feed inflationary pressures appeared to ease, while the dollar regained strength ahead of US payrolls data on Friday seen as key to the Federal Reserve’s next move.
MSCI’s gauge of global stocks was down 0.1 per cent by 0823 GMT but off a more than three-month low hit during Asian trading.
European stocks rose 0.3 per cent as rising bank stocks and an encouraging earnings update from chipmaker Infineon calmed nerves following a tech-fuelled selloff on Monday.
Wall Street was also set for a rebound with futures on the tech-heavy Nasdaq up 0.3 per cent and S&P 500 futures 0.2 per cent higher.
Asian shares fell for a third straight day, catching up with heavy losses in the United States, where investors dumped Big Tech as Facebook was hit by a nearly six-hour outage.
Facebook’s Frankfurt-listed stock rose 2.6 per cent as its services came back online.
But investors remained cautious, worrying that the rally in energy prices and supply chain disruptions could derail the economic recovery just as the U.S. Federal Reserve gets closer to reducing its massive stimulus.
Oil prices hit their highest levels in at least three years, extending gains from the previous session that came after the world’s major oil producers announced they had decided to keep a cap on crude supplies.
OPEC+ confirmed on Monday it would stick to its current output policy as demand for petroleum products rebounds, despite pressure from some countries for a bigger boost to production.
Brent crude rose 0.6 per cent at $81.75 a barrel, while U.S. oil added 0.4 per cent at $77.94.
Market focus in Asia was on whether embattled property developer China Evergrande would offer any respite to investors looking for signs of asset disposals.
Trading in shares in the world’s largest indebted developer was halted on Monday but other Chinese property developers grappled with ratings downgrades on worries about their ability to repay debt.
The US dollar edged back towards a one-year high versus major peers ahead of a key payrolls report at the end of the week that could boost the case for the Fed to start tapering stimulus as soon as next month.
Amazon. com shares fell sharply on Monday, with the e-commerce giant falling back into negative territory for the year, as a sustained rise in Treasury yields is hurting the earnings outlook for companies with high valuations.
The stock fell 2.9 per cent in its sixth straight daily decline, the longest such streak since an eight-day drop that ended in August 2019. With the drop, the stock is now down 2.1 per cent for 2021, making it the only one of Wall Street’s five largest names to be negative for the year.
The day's weakness was widespread, as the rise in Treasury yields also pushed investors out of tech and other high-growth areas of the market. Among other mega-cap stocks, Apple fell 2.5 per cent, Microsoft dropped 2.1 per cent, Alphabet declined 2.1 per cent, and Facebook sank 4.9 per cent.
Despite the declines, however, the others all remain in positive territory for the year, with gains ranging from Apple’s nearly 5 per cent advance to Alphabet’s surge of more than 50 per cent. The rise in yields has pressured tech names, as investors calculate that future earnings gains will be less valuable amid higher rates. The 10-year Treasury yield is currently around 1.49 per cent, up from 1.3 per cent on September 22nd. – Reuters, Bloomberg
