Stocks pulled back on concerns equities are overvalued and commodities rallied with investors pricing in stronger growth and faster inflation as the global economy recovers from the pandemic.
Technology took the brunt of the selling as higher yields dented the appeal of expensive, growth-focused stocks. The Nasdaq 100 slid about 1% and European and Asian markets were broadly negative. Boeing Co. shares declined about 2% after airlines halted flights using the company’s 777 aircraft following an engine failure.
Commodities were almost uniformly green. Brent oil climbed above $63 a barrel as Goldman Sachs Group Inc. predicted prices could advance into the $70s in coming months. Copper rose above $9,000 a metric ton for the first time in nine years, taking another step closer to an all-time high set in 2011 as investors bet that supply tightness will increase as the world recovers from the pandemic.
“We are still in a risk-on environment,” Adrian Zuercher, head of global asset allocation at UBS Wealth Management, said on Bloomberg TV. “Everybody is playing out the outlook for better economic growth, the outlook for more fiscal stimulus.”
Treasury yields were little changed after a key part of the curve — the gap between 5- and 30-year yields — touched the highest level in more than five years. Yields rose in Asia, while European government yields reversed an advance and edged lower.
Elsewhere, Brazilian markets tumbled following President Jair Bolsonaro’s decision to replace the head of Petroleo Brasileiro SA, the state-controlled oil company. The real fell 2.2% at the open, breaching the key 5.5 per dollar level that had been serving as support for the currency. The Ibovespa stock gauge dropped more than 5%.
Bitcoin slumped more than 10% at one point as prices pulled back from an all-time high.
Some key events to watch this week:
- Fed Chair Jerome Powell delivers the central bank’s semi-annual monetary policy report to the Senate Banking Committee on Tuesday.
- EIA crude oil inventory report is out Wednesday.
- Finance ministers and central bankers from the Group of 20 will meet virtually Friday. U.S. Treasury Secretary Janet Yellen will be among the attendees.
These are some of the main moves in markets:
- The S&P 500 Index declined 0.5% as of 9:55 a.m. New York time.
- The Stoxx Europe 600 Index fell 0.5%.
- The MSCI Asia Pacific Index dipped 0.7%.
- The MSCI Emerging Market Index declined 2%.
- The Bloomberg Dollar Spot Index was little changed.
- The euro climbed 0.2% to $1.2146.
- The British pound increased 0.1% to $1.4029.
- The Japanese yen gained 0.1% to 105.37 per dollar.
- The yield on 10-year Treasuries was little changed at 1.33%.
- Germany’s 10-year yield fell four basis points to -0.35%.
- Britain’s 10-year yield fell three basis points to 0.66%.
- West Texas Intermediate crude gained 2.3% to $60.62 a barrel.
- Gold strengthened 1.2% to $1,805.83 an ounce.