Stock Markets cautious, after a bad Monday

On Tuesday, Global bourses were cautious, mostly unable to recover the sharp falls of the previous session. The pan-European Stoxx 600 index, off 1% on Monday, is up just 0.1%. London’s FTSE 100 is outperforming, gaining 0.6% as miners bounce in response to a surging copper price on fears of a strike at the giant Escondida mine in Chile.

In the US, investors are absorbing news that Mr Trump fired the acting US attorney-general Sally Yates because she directed justice department lawyers not to defend his executive order imposing a travel ban on people from seven Muslim-majority nations. From the day of the US election in November to its record closing high of 2,298 last week, the S&P 500 jumped 7.5%, sparking a rally across developed stock markets.

But the US equity benchmark lost 0.6% on Monday — its worst showing in the year to date — while the Dow Jones Industrial Average dropped by the same amount to settle below the 20,000-point mark. Sentiment also is not being helped by some poorly-received earnings reports from the likes of Under Armour and UPS.

Japan’s broad Topix index fell 1.4% as dealers noted the yen’s overnight strength and after the Bank of Japan opted to keep interest rates unchanged. Mainland China, Hong Kong and Taiwan remained shut for the lunar New Year holiday.

Market uncertainty is a boon for supposedly safe sovereign debt. But after yields initially fell on Tuesday, they are now mixed amid wariness over inflation. The 10-year German Bund yield, which moves inversely to price, is up 1 basis point to 0.45% after a report showed Eurozone inflation this month hit a four-year high of 1.8%.

The 10-year US Treasury yield is down 1bp to 2.48% ahead of the Federal Reserve’s monetary policy decision on Wednesday. In Japan, government bonds added 1bp to 0.09% after the BoJ’s policy decision. New data showed Japan’s household spending in December contracted at its slowest rate in more than a year as the jobless level remained at a multi-decade low.