The rise in Stocks – Cold Winter for Netflix
Stocks rose on Wednesday; however, the profit was offset by the question of how much the yield on real bonds will increase. Investors sifted through Netflix‘s frustrated revenue and the ongoing war in Ukraine. The STOXX index of 600 European companies increased by 0.4%, totaling 458.17 points. MSCI All country’s stock index was 0.2% stronger. Investors kept a close eye on securities protected by 10-year treasury inflation, Whose revenue fell to a harmful level for the first time since March 2020 on Tuesday.
An increase in real income creates a new reverse wind for risky assets such as stocks, Especially the big tech firms announcing revenue next week. Shares of Netflix sank Tuesday night after news broke that the firm was losing subscribers. Nasdaq futures fell 0.6 percent. S&P 500 futures dropped to 0.3 percent.
The biggest question that markets are struggling with is whether inflation is at its peak? If inflation has peaked, it might be an excellent time to repurchase the bonds, Which is why uncertainty is expected regarding the future direction of the shares.
The dollar rose to a new two-decade peak against the yen, which rose; When the Bank of Japan re-entered the market to defend its ultra-low interest rate policy. Data from the International Monetary Fund begins this week on how much Ukraine’s two-month war hurts the global economy. The US Federal Reserve publishes its “Beige Book” on economic conditions from late February to early Wednesday. Analysts estimate that economic activity should decline slightly to a moderate pace. German producer prices in Europe hit record highs amid the war in Ukraine.
Asian Stocks
MSCI’s broadest Asia-Pacific stock index outside Japan rose 0.3%, its first positive session in a week. Japan’s Nikkei rose 0.8%, and other markets in the region followed Tuesday’s gains on Wall Street, Where the three main benchmarks had the best days in a month, which was helped by several strong wins. The Nasdaq closed at 2.2%. China has stopped the regional trend. China Blue Chips fell 1.5%; Since then, the central bank has kept lending rates unchanged. While frequent promises from the government have helped slow the economy, the worst COVID-19 blast has hit in two years.
In contrast, this decision contributed to the Chinese yuan in recovery; After reaching its lowest level since early trading in October. Investors were looking for stimulus from China, but the PBOC did not announce it today. Markets inevitably intend to interpret this negatively due to the extension through April; This means that the worst months for economic data are expected.
The yield on China’s 10-year high government bond contract fell below US 10-year treasury revenue for the first time since 2010. China’s 10-year revenue last was about 2.85%. Treasury 10-year benchmark income was up 3% on Wednesday; however, little has changed today. Interest differences are also a factor for Japan. On Wednesday, the central bank offered to buy unlimited 10-year Japanese government bonds at 0.25%, the third step after February to protect its benefits.
Conclusion
This yield curve control has pushed the yen against the dollar to a 20-year low. However, the dollar fell 0.2% against the yen on Wednesday. Oil prices recovered due to sharp losses in the previous session. Concerns dominated the supply cuts in Russia and Libya. Brent oil futures rose 1.2%; they reached $108.55 per barrel. Spot Gold fell 0.4% and reached its lowest point in the week, driven by higher yields.
