GLOBAL MARKETS-Tech Reboots Stocks, Dollar Takes Breathe Over Thanksgiving

* Tech stocks led stocks higher, lockdowns hit travel, leisure

* Bond market yields fall after recent rise

* Volatile emerging markets enjoy some peace and quiet

* Oil seesaw after a few hectic days (price updates)

By Marc Jones

LONDON, Nov. 25 (Reuters) – A rebound in tech stocks pushed European equities higher on Thursday, following similar gains on Wall Street and Asia and also helped by a small dip in the dollar from its 17-month high.

With US markets closed for Thanksgiving, focus has turned to Europe, where a spate of COVID-19 cases is raising the prospect of lockdowns over the Christmas shopping season.

Those concerns had pushed the pan-European STOXX 600 index to a three-week low on Wednesday, but it was up nearly half a percent as a 1% gain in the technology sector offset the eighth consecutive decline in travel and leisure stocks. .

“We continue to view every sell-off as the buy-the-dip opportunity,” said Marija Veitmane, global markets strategist at State Street Global Markets, adding that corporate earnings were still robust and borrowing costs were still very low.

An indicator of the bullishness underlying the stock markets can be seen in the data. According to BofA strategists, equity fund inflows have passed the $1 trillion mark since the beginning of the year, more than the combined previous 19 years of inflows.

Government bond markets, which are driving up these borrowing costs, saw a slight dip in German interest rates after Social Democrat and former finance minister Olaf Scholz struck a three-way coalition deal on Wednesday, replacing Angela Merkel at the helm of Europe’s largest economy. .

It was the first drop in revenue in three days. They have risen sharply again this week as traders increasingly expect the European Central Bank to join the US Federal Reserve in raising interest rates next year.

“The inflation debate, whether temporary or not, is still there,” said Dirk Schmacher, head of European Macro Research at Natixis.

He also signaled the renewed lockdown in Austria and the rapidly rising numbers of COVID-19 cases in parts of Germany and elsewhere in Europe.


Emerging markets saw some relative calm after a few turbulent days when the Turkish lira was battered again, tensions rose between Russia and Ukraine, and Mexico’s president worried about central bank independence by taking over a virtually unknown person at the helm. to install.

The lira shook off early losses and rose 0.5%, extending Wednesday’s gains, which came after a brutal 11-day, 24% losing streak after President Tayyip Erdogan backed more rate cuts.

The Russian ruble moved from the lows of the past four months as Moscow said it had not turned its back on peace talks in eastern Ukraine while the South African rand recovered from a year-long low.

In Asia overnight, the tech recovery initiated by the Nasdaq helped Japan’s Nikkei finish 0.7% higher and meant Hong Kong’s tech index could lose six sessions.

Other stock moves, however, were more muted. MSCI’s broadest index of Asia-Pacific stocks outside of Japan ended just after little movement throughout the day.

In general terms, “When it comes to regional equity allocation, we’re looking at the US dollar making new highs and that’s a headwind for emerging market equities,” said Fook-Hien Yap, senior investment strategist at Standard Chartered Bank. management.

The dollar is trading near its nearly five-year high against the Japanese currency at 115.3 yen, consolidating a nearly 18-month high against the euro, which was a fraction higher at $1.1222.

Several Federal Reserve policymakers have said in recent days that they would be open to accelerating the tapering of the central bank’s bond-buying program if high inflation persisted, and intervene more quickly to raise interest rates. Fed minutes in November. 2-3 policy meeting turned out.

“The market is now pricing in more than two increases for next year, but we think that’s overly aggressive. We’re only looking for about one increase next year,” Yap said. Goldman Sachs expects three rate hikes next year.

These expectations have pushed yields on US Treasuries higher, albeit inconsistently, with the benchmark 10-year bond closing before the Thanksgiving break at 1.6427% and rising to 1.6930% on Wednesday.

US Treasuries and US stock markets will resume on Friday, albeit for a shorter session, meaning trading will almost certainly be weak.

Oil prices, meanwhile, rose after a turbulent few days in which the United States said it would release millions of barrels of oil from strategic reserves in talks with China, India, South Korea, Japan and Britain to try to cut oil prices after calls for OPEC+ to pump more was ignored.

Investors had already largely priced in the move, however, after more than a week of signals from the big players, meaning Brent really jumped on Wednesday. It last traded at $82 a barrel in London, which was 6% higher than week lows but a fraction lower on the day.

Spot gold rose 0.17% to 1791 an ounce.

(Additional reporting by Saikat Chatterjee and Sujata Rao in London and Alun John in Hong Kong, edited by Angus MacSwan, William Maclean and Toby Chopra)

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