World equities market stayed edgy on Thursday, April 26, with shares eking out gains amid concern over the global economic outlook and with U.S. bond yields at four-year highs after breaking above the psychologically significant 3 percent line this week.
Investors will be watching the European Central Bank later for clues on when it will signal an end-date for its 2.55 trillion euro ($3.2 trillion) asset-buying program.
Equities enjoyed strong gains in South Korea, where electronics conglomerate and key tech bellwether Samsung posted record quarterly profits, while Japan’s Nikkei added 0.5 percent.
On Wednesday, the U.S. Dow Jones benchmark snapped a five-day losing streak thanks to more strong corporate earnings. While the Nasdaq tech index fell again, it could benefit from a strong after-market rise in Facebook which posted forecast-beating results.
Equity futures were tipping Nasdaq to open 0.4 percent higher while the other two indexes are seen only marginally higher.
But the momentum fizzed in Europe where shares flatlined near one-week lows, as a mixed set of earnings weighed, including a 79 percent profit drop at Deutsche Bank.
All that kept MSCI’s all-country equity index only marginally in the black after five straight days of losses.
Investors remain cautious even though company after company, especially in the United States, has posted record-shattering first quarter results. Instead, signs of ebbing economic growth momentum are preying on their minds, alongside higher global borrowing costs that could dent future earnings.
Oil’s 11 percent rise this year, on top of last year’s 18 percent jump, is adding to inflation fears.
“The music is still playing and we are still dancing, but we are reducing risk,” said Pau Morilla-Giner, chief investment officer at London & Capital.
“The worry is about an overheating, leading to a rise in inflation, higher interest rates which bring on a textbook recession.”
Ten-year Treasury yields, the reference rate for global borrowing, extended their yield surge. Having risen around 25 basis points since early-April, the yield is a whisker off the 3.041 percent mark that would be a new four-year high.
The yield has risen for six straight days – the longest upward run since September 2017, according to Reuters data, Reuters reports.
