Global stocks mixed after Wall St rises on tech rally

BEIJING (AP) — Global stocks were mixed yesterday after Wall Street rose on a rally for major tech companies.

London and Frankfurt opened lower while Tokyo and Hong Kong advanced. Shanghai and Seoul also declined.

Wall Street futures were lower after the benchmark S&P 500 index rose on Tuesday on gains for Apple, Amazon and other tech majors. The Nasdaq composite index, dominated by tech shares, surged 3.7 per cent for its biggest gain in four months.

Markets have been adjusting to a rise in long-term interest rates in the bond market, which has pulled money out of stocks. A reversal in bond market trends at least temporarily sent investors back to companies they hope will thrive after the coronavirus pandemic ends.

The swing shows “how fragile sentiment has become, driven by the absolute uncertainty” about the outlook for interest rates and inflation, said Stephen Innes of Axi in a report.

In early trading, the FTSE 100 in London rose 0.6 per cent to 6,686.70 and Frankfurt’s DAX added 0.1 per cent to 14,420.95. The CAC 40 in Paris advanced less than 0.1 per cent to 5,920.13.

On Wall Street, futures for the S&P 500 index and the Dow Jones Industrial Average were up less than 0.1 per cent.

People walk by an electronic stock board of a securities firm in Tokyo. PHOTO: AP

On Tuesday, the S&P 500 rose 1.4 per cent. Communication companies and those that rely on consumer spending contributed to the increase. Financial, energy and industrial stocks lagged the broader market.

Apple rose 4.1 per cent, chipmaker Nvidia climbed eight per cent and Tesla jumped 19.6 per cent for the biggest gain in the S&P 500.

The Dow, weighted less toward tech, rose 0.1 per cent. Despite its gain, the Nasdaq is 7.2 per cent below its February 12 high. On Monday it closed 10 per cent below its peak in what is known as a correction on Wall Street.

In Asia, the Shanghai Composite Index ended down less than 0.1 per cent at 3,357.14 after spending most of the day in positive territory.

The Nikkei 225 in Tokyo advanced less than 0.1 per cent to 29,036.56. The Hang Seng in Hong Kong added 0.5 per cent to 28,907.52. The Kospi in Seoul lost 0.6 per cent to 2,958.12 while Australia’s S&P-ASX 200 slid 0.8 per cent to 6,714.10.

India’s Sensex rose 0.5 per cent to 51,272.76. New Zealand and Indonesia rose while Singapore retreated.

On Wall Street, big tech stocks that fuelled last year’s rebound after the coronavirus outbreak upended the global economy have been shedding gains since the Nasdaq peak on February 12.

Apple was down 14 per cent through the end of last week.

Financial sector stocks, which had benefitted from the rise in bond yields, were the biggest decliners on Tuesday.

Bank of America fell 2.2 per cent, while American Express slid 3.4 per cent. Banks and credit card issuers tend to do well when interest rates are rising because they can charge higher rates.

Bond yields, or the difference between the current market price and the payout at maturity, have been widening due to rising expectations for growth and the inflation that could follow. Inflation erodes the value of that future bond payout, encouraging investors to shift to stocks.

The fall in bond prices drew investors who didn’t want to pay high prices for stocks, especially tech stocks that looked most expensive.

Investors are betting the USD1.9 trillion in coming government stimulus will help lift the United States (US) economy out of its coronavirus-induced malaise.

The package set for final approval in the US House yesterday provides direct payments of up to USD1,400 for most Americans and extends emergency unemployment benefits that help to support consumer spending, the economy’s main engine.

In energy markets, benchmark US crude lost 33 cents to USD63.68 per barrel in electronic trading on the New York Mercantile Exchange. The contract sank USD1.04 on Tuesday to USD64.01. Brent crude, used to price international oils, declined 46 cents to USD67.07 per barrel in London. It retreated 72 cents the previous session to USD67.52.

The dollar rose to JPY108.82 from Tuesday’s JPY108.47. The euro declined to EUR1.1876 from EUR1.1901.