Traders Edge : Thursday 18 February

The S&P 500 and the Nasdaq fell on Wednesday as concerns about inflation pressured stocks and investors rotated out of technology shares.

Asia

Japanese shares fell on Wednesday as investors booked profits after a recent rally drove them to a 30-year high, even as pandemic-beaten shares gained on expectations for an economic recovery from a coronavirus-driven slump.

The Nikkei share average edged down 0.58 per cent to 30,292.19 from Tuesday’s high of 30,714.52, a peak since August 1990.

Europe

European shares retreated from near one-year highs on Wednesday as concerns over a possible spike in inflation and rising bond yields prompted a pullback in risk-driven assets, while Gucci owner Kering led losses after posting lower sales.

The pan-European STOXX 600 index closed 0.7 per cent lower, while London’s mid-cap FTSE 250 lost 1.3 per cent as data showed British inflation rose a little more than expected in January.

The possibility of a near-term spike in inflation, coupled with rising debt yields, has seen investors pricing in the likely tapering of monetary policy by major central banks, which in turn could weigh on risk-driven assets.

‘We believe central banks for now have strong incentives to lean against any rapid rise in nominal yields even as inflation rises…Yet rising debt levels may eventually pose risks to the low-rate regime,’ analysts at Blackrock Investment Institute said in a note to clients.

Traders-Edge-18-February-2021

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