Global equities inch higher, bonds gain as Europe COVID cases rise

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A man walks past an electronic stock quotation board outside a brokerage in Tokyo

NEW YORK, March 22 (Reuters) – Global equities gained and
safe-haven assets such as U.S. Treasuries rallied on Monday as
investors weighed rising coronavirus cases in Europe against a
break in the recent run-up of bond yields sparked by concerns of
higher global inflation.

On an unsettled day for global markets, risk assets such as
oil rose alongside safe havens such as Treasuries, while Turkish
assets took a beating after a shock weekend decision to replace
the country’s hawkish central bank governor.

A third wave of COVID-19 across Europe due to highly
contagious coronavirus variants is boosting concerns about
another round of economic restrictions, with Paris going into a
four-week lockdown late last week.

“The number of new COVID-19 cases is rising rapidly, and an
extension of the lockdown (is) inevitable for many European
countries. No one will be surprised by such a decision,” said
Milan Cutkovic, market analyst at Axi.

“The question is whether investors will remain calm amid the
increasing uncertainty. If the vaccination campaign would be
running successfully, it would be much easier for market
participants to ignore the sharp uptick in new cases.”

MSCI’s gauge of stocks across the globe
gained 0.49%, with slight gains in Europe but a 2.1% decline in
Japan’s Nikkei index.

In afternoon trading on Wall Street, the Dow Jones
Industrial Average rose 135.23 points, or 0.41%, to
32,763.2, the S&P 500 gained 31.16 points, or 0.80%, to
3,944.26 and the Nasdaq Composite added 182.21 points,
or 1.38%, to 13,397.45.

Heavyweight technology stocks sold off last week as the
surge in bond yields in recent weeks sparked a flight from
richly valued equities.

A host of Federal Reserve officials speak this week,
including three appearances by Chair Jerome Powell, providing
plenty of opportunity for more volatility in markets.

Benchmark 10-year notes last rose 15/32 in price
to yield 1.6787%, from 1.732% late on Friday.

In currency markets, Turkey’s lira fell 15% to
8.485 against the dollar, its worst plunge since the last
Turkish crisis of 2018, before paring losses on calming words
from Finance Minister Lutfi Elvan.

“We don’t see any contagion risk to the rest of emerging
markets; it’s been shown time and time again that the lira is
its own story,” said John Hardy, head of foreign exchange
strategy at Saxo Bank.

Turkish sovereign bond yields soared above 18%, hitting a
22-month high.

The dollar index fell 0.354%, with the euro up
0.28% to $1.1936.

Oil prices steadied after a broad sell-off last week as
market players remained confident demand would rebound later in
the year, despite European coronavirus lockdowns dimming hopes
for a quick economic recovery.

U.S. crude rose 0.08% to $61.55 per barrel and Brent
was at $64.47, down 0.09% on the day.

(Reporting by David Randall; Editing by Kirsten Donovan, Dan
Grebler and Sonya Hepinstall)