“The long weekend has not improved the mood of US traders, and further declines have been seen across stock markets this afternoon.”
US markets return to fresh selling pressure
“Those hoping for a sunnier mood from US traders following their three-day weekend will have been disappointed. The weakness of US futures this morning has followed through into the cash session, stymieing any hope of a rebound in stocks around the globe. European markets are not suffering as badly, but the rise in yields continues to pressure almost all sectors on Wall Street. It looks like the combination of earnings season plus a looming FOMC decision continues to produce a powerful incentive to cut back US equity exposure. Disappointment with bank earnings remains a feature of reporting season thus far, indicating that investors will demand much stronger performance from their stocks in a world of higher yields.”
Gold shines despite higher yields
“The inflation story appears to be enough to lift gold this afternoon, which has shrugged off some downward moves to edge up slightly. While higher bond yields should normally put pressure on gold, the global rise in prices (something even the ultra-dovish Bank of Japan can no longer ignore) should give gold a longer-term boost. The repeated calls for higher oil prices only bolster this argument yet further.”
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