SYDNEY (REUTERS) - Share markets turned mixed on Monday (March 8) as the US Senate passage of a US$1.9 trillion stimulus bill augured well for faster global economic growth, but also put fresh pressure on Treasuries and tech stocks with lofty valuations.
The upbeat economic news continued as China's exports surged 155 per cent in February compared with a year earlier when much of the economy shut down to fight the coronavirus.
"With the Senate's passage, we expect growth momentum to accelerate and forecast global GDP growth will surge to a 7.5 per cent annualised rate in the middle quarters of the year," said JPMorgan economists in a note.
"Every US$1 trillion of fiscal stimulus adds around US$4-US$5 to EPS, implying 6-7 per cent upside for the remainder of the year."
However, analysts also expected a sharp acceleration in inflation, stoked in part by the latest spike in oil prices, which was pushing up bond yields and stretching equity valuations, particularly in the high tech space.
That saw Nasdaq futures reverse early gains to slip 1.0 per cent, dragging S&P 500 futures down 0.2 per cent.
MSCI's broadest index of Asia-Pacific shares outside Japan followed with a fall of 0.5 per cent, while Chinese blue chips shed 0.9 per cent.
Japan's Nikkei clung to a gain of 0.2 per cent, while EUROSTOXX 50 futures were still up 0.8 per cent and FTSE futures 0.9 per cent per cent.
Singapore's Straits Times Index was up 1.8 per cent at the midday break as shares linked to Jardine Matheson Holdings, Singapore's biggest conglomerate by market value, rallied after the company said it will delist the group's second-largest unit in aUS$5.5 billion buyout deal to simplify its structure.
Equity investors had taken heart from US data showing nonfarm payrolls surged by 379,000 jobs last month, while the jobless rate dipped to 6.2 per cent in a positive sign for incomes, spending and corporate earnings.
US Treasury Secretary Janet Yellen tried to counter inflation concerns by noting the true unemployment rate was nearer 10 per cent and there was still plenty of slack in the labour market.
Yet yields on US 10-year Treasuries still hit a one-year high of 1.625 per cent in the wake of the data, and stood at 1.59 per cent on Monday. Yields increased a hefty 16 basis points for the week, while German yields actually dipped 4 basis points.
The European Central Bank meets on Thursday amid talk it will protest the recent rise in euro zone yields and perhaps mull ways to restrain further increases.
The diverging trajectory on yields boosted the dollar on the euro, which fell away to a three-month low of US$1.1892, and was last pinned at US$1.1904.
BofA analyst Athanasios Vamvakidis argued the potent mix of US stimulus, faster reopening and greater consumer firepower was a clear positive for the dollar.
"Including the current proposed stimulus package and further upside from a second-half infrastructure bill, total US fiscal support is six times greater than the EU recovery fund," he said. "The Fed is also supportive with US money supply growing two times faster than the Eurozone."
The US dollar index duly shot up to levels not seen since late November and was last at 92.057, well above its recent trough of 89.677.
It also gained on the low-yielding yen, reaching a nine-month top of 108.63, and was last changing hands at 108.41.
The jump in yields has weighed on gold, which offers no fixed return, and left it at US$1,705 an ounce and just above a nine-month low.
Oil prices were up the highest levels in more than a year after Yemen's Houthi forces fired drones and missiles at the heart of Saudi Arabia's oil industry on Sunday, raising concerns about production.
Prices had already been supported by a decision by Opec and its allies not to increase supply in April.
Brent climbed US$1.44 a barrel to US$70.80, while US crude rose US$1.36 to US$67.45 per barrel.
