Asia, Europe slump, US attempts rebound

LONDON: Asian and European stocks slumped due to concerns over the prospect of high inflation and interestrate rises that could hamper economic recovery from the Covid-19 pandemic, but US stocks attempted to rebound after tame inflation data.

The dollar rose against its main rivals ahead of Congress later Friday voting on US President Joe Biden’s enormous US$1.9-trillion economic rescue package.

Oil prices fell after striking 13-month peaks Thursday on keen demand.

Vaccine rollouts, slowing Covid infection rates and Biden’s stimulus package are proving to be a double-edged sword for traders as they weigh the much-needed return to prepandemic life with the prospect that prices could rise, possibly sharply.

There is a worry that surging inflation could threaten one of the key pillars of the rally on world markets from their March nadir - record-low borrowing costs.

Alarm bells have been ringing for weeks as the yield on benchmark 10-year US Treasuries climbed to one-year highs as investors moved out of the safe haven of government bonds.

“Yields have been rising for some time but have clearly accelerated recently and investors are nervous about the prospect of higher inflation and less central bank support,” Craig Erlam, market analyst at Oanda trading group, told AFP.

Yields have advanced around the world, from New Zealand and Australia to France, Germany and Japan.