Global Markets Indices Drop as Investors Rotate Positions
US and European stocks declined as rising oil prices bolstered global inflation expectations, prompting central bankers to tighten monetary policy.
Investors are adjusting their portfolios to reduce the impact of rising energy costs amid a slowdown in interest rate hikes in the US.
Persistently rising oil prices and a sharp rebound in global bond yields have reawakened inflation fears, pressuring risky assets and shaping overnight price action, First National Bank (FBN) said in a brief on Friday.
US indices closed lower, with the S&P 500 down 0.87%, the NASDAQ off 1.00%, and the Dow Jones retreating 1.32%, after Treasury yields reversed course and the government’s debt buyback plans failed to reassure investors.
European equities struggled under the combined weight of weaker Chinese demand for luxury goods and macroeconomic headwinds, as the Euro Stoxx 50 closed 0.35% lower.
The FTSE 100 eked out a 0.04% gain on strength in mining and energy stocks. In Asia-Pacific trade, markets were broadly higher today, led by Korea (KOSPI: +1.28%) and Hong Kong (Hang Seng +0.72%).
The momentum was driven by Samsung’s reported $79 billion shareholder return package, which lifted chipmakers across the region, and by China’s announcement of new fiscal support measures.
Japan (Nikkei -0.47%) and Australia (ASX 200 -0.34%) lagged as rising Treasury yields amid renewed scepticism about US bond buybacks dampened risk appetite.
Despite global futures pointing slightly higher, the JSE is set for a flat-to-negative open this morning as rising oil prices and concerns over the US bond buyback programme are likely to keep sentiment constrained.
Tencent is trading 0.75% lower, which may limit early momentum for Naspers and Prosus.
In addition, the ASX 300 Metals & Mining Index is 0.16% lower, offering little support for JSE resource counters despite platinum advancing to an 11-week high and gold remaining steady near recent peaks.
The Johannesburg Stock Exchange (JSE) in South Africa closed lower on Thursday amid global market pressures and President Trump vowing to impose maximum economic pressure on Iran.
The All Share Index fell 0.34% to 115 659 points, while the Top 40 declined 0.29% to 108 146 points. Financials (-1.44%) led the decline as the Banking Index fell 1.37% with FirstRand (-1.52%), Capitec (-1.49%) and Standard (-1.47%) all closing in the red.
Industrials (-1.27%) were weaker with TFG (-3.87%), Pepkor (-3.12%) and Bidvest (-1.92%.) trending lower as investors rotated into gold and mining stocks.
Resources (+1.53%) outperformed on the day with the Precious Metals & Mining Index up 2.00% as Pan African Resources (+7.28%), DRDGold (+6.43%) and AngloGold Ashanti (+5.85%) closed the session in positive territory.
Global Markets Dip as Investors Exit Risky Assets to Chase Yields
