World Stocks slip from six-year high

Daily Trust - - NEWS -

World stocks slipped from last week’s six-year high yes­ter­day on con­cerns about tech­nol­ogy shares, while spec­u­la­tion the Euro­pean Cen­tral Bank will ease pol­icy fur­ther pushed down Euro­pean bond yields.

The Nas­daq suf­fered its big­gest de­cline since Fe­bru­ary on Fri­day as high-fly­ing and high-growth shares mostly in the tech and biotech sec­tors ex­tended their re­cent sell-off, with sen­ti­ment spilling into Asia.

The pull-back came af­ter the Dow and S&P 500 in­dexes hit record highs af­ter March U.S. jobs data soothed con­cerns about the health of the eco­nomic re­cov­ery there but eased fears of an early in­ter­est rate hike.

“This could be the start of a ‘profit tak­ing’ con­sol­i­da­tion pe­riod. People should buy only when the pull-back is done, while it could also be time to hedge the portfolios,” said Ger­ard Sag­nier, an­a­lyst at bro­ker­age Aurel BGC in Paris.

The MSCI world eq­uity in­dex fell a third of a per­cent, hav­ing hit lev­els not seen since late 2007 on Fri­day.

The Nikkei fell 1.6 per­cent, led lower by in­dex heavy­weight Softbank which fell over 4 per­cent in brisk turnover.

SoftBank shares have be­come very sen­si­tive to moves in U.S. tech stocks ahead of Alibaba’s IPO, which is ex­pected to be­come one of the largest of­fer­ings in his­tory. SoftBank holds around a 37 per­cent stake in the Chi­nese e-com­merce gi­ant.

Euro­pean stocks were down around 1 per­cent while emerg­ing stocks out­per­formed with a de­cline of just 0.15 per­cent fol­low­ing three straight weeks of gains.

The dol­lar was steady against a bas­ket of six ma­jor cur­ren­cies, while the euro was un­der pres­sure from ex­pec­ta­tions the ECB may un­der­take a pro­gramme of as­set pur­chases this year to sup­port the econ­omy.

Such spec­u­la­tion boosted Ger­man and Ital­ian bond fu­tures, fol­low­ing a rally on Fri­day af­ter a Ger­man news­pa­per said the ECB had mod­elled the ef­fects of buy­ing a tril­lion eu­ros of as­sets to ward off de­fla­tion.

That fol­lowed com­ments by ECB Pres­i­dent Mario Draghi that pol­i­cy­mak­ers were unan­i­mous that as­set pur­chases, known as quan­ti­ta­tive eas­ing or QE, might be needed to tackle per­sis­tently low in­fla­tion.

“At the mo­ment pe­riph­ery, es­pe­cially now we have got this QE talk, is mas­sively sup­ported. That’s the most ob­vi­ous trade in town,” a trader said.

U.S. crude oil fell 0.6 per­cent to $100.50 a bar­rel af­ter wor­ries about sup­ply dis­rup­tion eased as Libyan rebels oc­cu­py­ing four east­ern oil ports agreed to grad­u­ally end their eight-mon­thold block­ade. (Reuters)

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