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Bonds slump as comments by central banks send ripples through markets

Remarks this week by Mario Draghi, the president of the European Central Bank, as well as by officials from the Bank of England have raised expectations that those two central banks are edging closer to tightening monetary policy.With the Fed approving dividends and buybacks in major banks as part of another round of stress tests, USA financial stocks rose but not enough to offset declines in technology and interest rate-sensitive sectors.Wall Street looks set to extend Wednesday’s gains at the opening bell, according to early USA futures prices, with the Dow Jones Industrial Average likely to gain 40 points, or 0.20%, at the start of trading while the broader S&P 500 will likely add 0.22% to yesterday’s advance.The pan-European FTSEurofirst 300 index lost 1.36 percent and MSCI’s gauge of stocks across the globe shed 0.54 percent.Stocks in Europe were little changed Friday morning.The gains for both the pound and the euro – which traded at 1.1398, the highest in more than a year, overnight – helped push the US dollar index to a nine-month low of 95.81 as investors bailed out of the greenback in search of both yield and diversification.Emerging market stocks lost 0.08 per cent. MSCI’s broadest index of Asia-Pacific shares outside Japan closed 0.59 per cent higher, while the Nikkei rose 0.45 per cent. The dollar index fell 0.46 percent, with the euro up 0.55 percent to $1.1439.The greenback touched a roughly five-month low of C$1.2987 against the Canadian dollar and last traded down 0.3 per cent at US$1.3001.The yield on benchmark ten-year German bunds rose to a seven-week high as investors were hit by fresh jitters that the European Central Bank’s stimulus programme would be scaled back.The fall in the United States dollar makes dollar-denominated assets cheaper for investors in other countries.USA oil futures were slightly higher after hitting a two-week peak, extending a rally into a sixth straight session after a decline in weekly US crude production temporarily alleviated concerns about deepening oversupply.USA crude rose 0.51 per cent to $44.97 per barrel and Brent was last at $47.42, up 0.23 per cent on the day.