Tuesday, 2 March 2021

Markets rise, rise in yields seen as “a good thing”

Markets rose sharply on Monday.

The S&P 500 soared 2.4 percent, the STOXX Europe 600 jumped 1.8 percent and the Nikkei 225 surged 2.1 percent.

Signs of stabilisation in the US 10-year Treasury yield on Monday helped lift stocks.

“Our bullish US equity view has already embedded expectations of rising interest rates,” said David Kostin, Goldman Sachs’ chief US equity strategist, in a note to clients.

“Equity investors are still looking at the rise in rates mostly as ‘a good thing’ and not yet as a threat notwithstanding some shaking of the tree in high multiple stocks and other parts of the market last week,” said Peter Boockvar, chief investment officer at Bleakley Advisory Group.

Indeed, strong manufacturing data also helped boost sentiment. The Institute for Supply Management’s index of US factory activity rose to 60.8 last month from 58.7 in January while the IHS Markit manufacturing PMI for the euro zone came in at 57.9, up from a flash estimate of 57.7.

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