Equities: Broad-based risk-off as bond yields surge – Danske Bank

Danske Research Team reports that global equities fell on Friday and remain weak, with Asian markets and US and European futures softer. Energy was the only sector higher, while defensive, low-volatility and value factors outperformed within a broader equity sell-off, as fiscal concerns and oil-driven inflation risks triggered broad de-risking across markets.

Risk assets sold as bond rout deepens

"Equities fell on Friday, and the tone remains weak this morning. Asian markets are lower, and US and European futures are also trading softer, as the global bond sell-off continues and oil prices extend gains amid the still unresolved Iran/Hormuz situation."

"Friday's equity session was telling. Energy was the only sector higher, supported by the move in oil, while defensive, low-volatility and value factors outperformed."

"But importantly, this was not a clean stagflation trade. Materials and commodity-related equities were also sold, and both gold and silver were under pressure last week, especially on Friday."

"That matters. If the market were simply pricing a stronger nominal growth environment, cyclicals and commodities should have held up better. Instead, the message from markets is more uncomfortable: this is increasingly about higher long-end yields driven by fiscal concerns, inflation risk and oil and not by growth alone."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)