# Global equities gain, as rising bond yields pressure gold
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2023-03-14
Category: FINANCE
Category URL: https://financedigest.com/category/finance
Meta Title: Global shares rebound as bank stocks rise, easing rate hike
Meta Description: Global shares bounced back as inflation data met expectations, easing concerns of a large rate hike next week. Bank stocks recover, bond yields rise.
URL: https://financedigest.com/global-equities-gain-as-rising-bond-yields-pressure-goldhtml

![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2023-03-14t151429z1lynxmpej2d0lprtroptp4usa-stocks-1736814318385-compressed.jpg)

By Chris Prentice and Amanda Cooper

NEW YORK/LONDON (Reuters) – Global shares stemmed a five-session rout on Tuesday as bank shares rebounded and key U.S. [inflation data](https://www.financedigest.com/dollar-trims-gains-vs-euro-after-u-s-inflation-data.html "Dollar trims gains vs euro after U.S. inflation data") was in line with expectations, bolstering bets of a smaller interest rate hike by the Federal Reserve at its meeting next week.

[Bond yields](https://www.financedigest.com/stocks-up-bond-yields-fall-as-markets-mull-a-fed-policy-pause.html "Stocks up, bond yields fall as markets mull a Fed policy pause") in the U.S. and the [euro zone](https://www.financedigest.com/euro-zone-economic-sentiment-rises-in-january-to-seven-month-high.html "Euro zone economic sentiment rises in January to seven-month high") rose after plunging the previous day, curbing a crisis-driven rally in gold.

[Crude oil](https://www.financedigest.com/oil-falls-as-earthquake-impact-on-crude-eases-rate-hike-fears-rise.html "Oil falls as earthquake impact on crude eases, rate hike fears rise") futures tumbled by $3 a barrel, and U.S. [prices hit](https://www.financedigest.com/uk-shop-price-inflation-hits-record-8-in-january-brc-2.html "UK shop price inflation hits record 8% in January: BRC") their lowest since December.

Data showed the U.S. Consumer Price Index (CPI) rose 0.4% in February versus 0.5% a month earlier. On a yearly basis, it rose 6.0% in February, compared with 6.4% in January.

U.S. Treasury [yields moderately extended gains following the data](https://www.financedigest.com/stocks-yields-fall-data-suggests-u-s-economy-cooling.html "Stocks, yields fall; data suggests U.S. economy cooling"), indicating some expectation that the Fed could continue to raise rates but at a gradual pace. \[US/\]

“The CPI report although in line and not perfect did not scream that they have no choice but to raise. The Fed still has options, which is a good thing,” said Jamie Cox, managing partner for Harris [Financial Group](https://www.financedigest.com/mazars-to-acquire-financial-modelling-consultancy-and-training-provider-corality-financial-group.html "Mazars to acquire financial modelling consultancy and training provider, Corality Financial Group") in Richmond, Virginia.

Tuesday’s broad gains in equity [markets signaled a “relief rally,”](https://www.financedigest.com/jittery-markets-attempt-risk-on-rally-while-waiting-for-powell.html "Jittery markets attempt risk-on rally while waiting for Powell") he said.

The Dow Jones Industrial Average rose 82.93 points, or 0.25%, to 31,899.22, the S&P 500 gained 33.43 points, or 0.87%, to 3,889.19, and the Nasdaq Composite gained 148.02 points, or 1.32%, to 11,336.22 by 2:14 p.m. EDT (1817 GMT).

U.S. bank stocks jumped, recovering some ground after the failure of [Silicon Valley Bank and Signature](https://www.financedigest.com/exclusive-u-s-regulator-seeks-sale-of-silicon-valley-bank-signature-bank-portfolios-sources.html "Exclusive-U.S. regulator seeks sale of Silicon Valley Bank, Signature Bank portfolios-sources") Bank triggered heavy selling by investors.

European shares closed up 1.53%, notching their [largest one-day gain since](https://www.financedigest.com/first-quarter-dash-for-cash-largest-since-early-2020-bofa.html "First quarter ‘dash for cash’ largest since early 2020 -BofA") December and marking the first gain in four sessions. \[.EU\]

European banks rebounded 2.5%, one [day after their largest one-day sell-off in over a year](https://www.financedigest.com/explainer-international-womens-day-date-history-and-this-years-theme.html "Explainer-International Women’s Day: date, history and this year’s theme").

The MSCI All-World index reversed early losses to advance 0.35%, gaining for the first in six sessions.

As recently as a week ago, investors were just recovering from a reality check that prompted many to assume [rates around the world were likely to head much higher](https://www.financedigest.com/wall-st-indexes-mixed-treasury-yields-tick-up-as-higher-rates-loom.html "Wall St indexes mixed, Treasury yields tick up as higher rates loom") and stay there for longer than previously expected.

“The 50-basis-point hikes are off the table for now. Markets are too fragile,” Harris Financial Group’s Cox said in a phone interview.

In under a week, three U.S. [banks have collapsed](https://www.financedigest.com/swiss-regulator-monitoring-banks-and-insurers-after-svb-collapse.html "Swiss regulator monitoring banks and insurers after SVB collapse"). It was the failure of technology-sector lender [Silicon Valley Bank](https://www.financedigest.com/hsbc-acquires-british-arm-of-stricken-silicon-valley-bank.html "HSBC acquires British arm of stricken Silicon Valley Bank") (SVB) that rattled investor confidence and triggered a rush into safe-haven assets like bonds and gold.

On Tuesday, [ratings agency Moody’s cut its outlook](https://www.financedigest.com/stocks-euro-gain-amid-divergent-fed-ecb-rate-hike-outlooks.html "Stocks, euro gain amid divergent Fed, ECB rate hike outlooks") on the U.S. banking system to “negative” from “stable.”

Banking [stocks around the world have shed hundreds of billions of dollars](https://www.financedigest.com/stocks-and-gold-cheer-u-s-inflation-picture-while-dollar-slides.html "Stocks and gold cheer U.S. inflation picture, while dollar slides") in value in a matter of days, while the government bond market has seen one of its biggest rallies in decades.

The two-year Treasury yield, which [rises with traders’ expectations](https://www.financedigest.com/german-industrial-orders-rise-more-than-expected-in-february.html "German industrial orders rise more than expected in February") of higher Fed fund rates, touched 4.2797% compared with a U.S. close of 4.03% after Monday’s largest one-day drop since 1987.

Germany’s two-year [yield rose 22.5 basis points to 2.928% after falling](https://www.financedigest.com/wall-st-stocks-fall-bond-yields-rise-as-china-drops-quarantine-rule.html "Wall St stocks fall, bond yields rise as China drops quarantine rule") by 37 basis points a day earlier. It was not far from levels seen at the end of February.

Expectations for the peak of the ECB deposit rate dropped to around 3.4% on Monday from 4.1% last Thursday, with [markets betting central banks](https://www.financedigest.com/global-bank-bonds-claw-back-losses-as-markets-rout-eases.html "Global bank bonds claw back losses as markets rout eases") would soften their policy stance as they assess financial stability risks.

Many have drawn parallels to the 2008 financial crisis, when indicators of financial [market stress shot up and equities](https://www.financedigest.com/deutsche-bank-equity-bear-market-rally-will-stretch-into-2023-dollar-weaker.html "Deutsche Bank: Equity bear market rally will stretch into 2023, dollar weaker") crumbled. But Societe Generale chief currency strategist Kit Juckes said the current situation was far more like the U.S. [savings and loans](https://www.financedigest.com/student-loans-hurting-workers-ability-to-save-for-retirement.html "STUDENT LOANS HURTING WORKERS’ ABILITY TO SAVE FOR RETIREMENT") crisis of the 1980s, in which hundreds of smaller banks folded when the Federal Reserve jacked up interest rates to control inflation.

SVB, which was the 16th biggest U.S. bank at the end of last year, is the largest lender to fail since 2008. The sharp rise in Fed rates in the last year, which tightened financial conditions in the [startup space](https://www.financedigest.com/a-guide-to-finding-office-space-for-your-startup.html "A guide to finding office space for your startup") in which SVB was a notable player, was front and center.

I don’t think this is a systemic [global banking](https://www.financedigest.com/global-shares-jump-but-bank-whack-a-mole-not-over.html "Global shares jump but bank ‘whack-a-mole’ not over") issue. If it’s an issue, it’s an issue of a smaller but less regulated [bank that has been growing very fast on the back](https://www.financedigest.com/bank-of-englands-mann-doubles-down-on-backing-for-rate-hikes.html "Bank of England’s Mann doubles down on backing for rate hikes") of being less regulated in a stable environment that has turned nasty,” Juckes said.

Overnight the VIX volatility index, nicknamed Wall Street’s “fear gauge,” neared six-month highs, and other indicators of market [stress showed early signs](https://www.financedigest.com/4-reasons-your-finance-employees-are-showing-signs-of-stress.html "4 reasons your finance employees are showing signs of stress") of strain. An index of bond market volatility – the ICE BofA MOVE index – had [hit a 14-year high by Monday’s close](https://www.financedigest.com/nestle-closes-french-buitoni-factory-hit-by-e-coli-outbreak.html "Nestle closes French Buitoni factory hit by E.coli outbreak").

The euro was up 0.1% on the day at $1.0736, having gained 1.51% in a month, while the dollar index, which tracks the greenback against a basket of currencies of other major trading partners, was down at 103.63.

The dollar rose 0.8% against the yen to 134.24, with the yen pressured as recent safe-haven flows and [Treasury yields](https://www.financedigest.com/wall-street-drops-treasury-yields-gyrate-on-fed-chairman-powells-remarks.html "Wall Street drops, Treasury yields gyrate on Fed Chairman Powell’s remarks") reversed.

Gold’s safe-haven rally also dried up on Tuesday in the face of higher [Treasury yields](https://www.financedigest.com/wall-st-flutters-treasury-yields-ease-as-powell-resumes-testimony.html "Wall St flutters, Treasury yields ease as Powell resumes testimony"). Spot gold prices fell 0.3% to $1,907.58 an ounce.

[Oil prices were down on lingering concerns that a fresh financial crisis could reduce future oil demand](https://www.financedigest.com/oil-gains-after-iea-sees-demand-rising-to-record-high.html "Oil gains after IEA sees demand rising to record high").

West Texas Intermediate crude futures fell 3.96%, or $2.97, to $71.83 a barrel. Brent crude, the global benchmark, fell 3.63%, or $2.93, to $77.84 \[O/R\]

Bicoin hit a nine-month high, taking gains past 30% in four sessions.

New York’s [financial regulator said its decision to close](https://www.financedigest.com/fast-track-financial-close.html "FAST-TRACK FINANCIAL CLOSE") Signature Bank had “nothing to do with crypto.

(Reporting by Tom Westbrook Editing by Sonali Paul, Mark Potter and Leslie Adler)


---
This blog is powered by Superblog. Visit https://superblog.ai to know more.
---