Global Stocks Pull Back After Strong Gains - Barron's

U.S. President Donald Trump speaks during a recorded video on a television screen in the press briefing room at the White House in Washington, D.C., on Jan. 6, 2021.

Shawn Thew/EPA/Bloomberg

Global stocks weakened on Monday, a modest reversal from the fast start in the year in the U.S. and global markets.

The Shanghai Composite dropped 1%, and the S&P ASX 100 declined 0.8% in Sydney. The Stoxx Europe 600 fell 0.4%, after gaining 3% last week.

In the U.S., futures on the Dow Jones Industrial Average were 0.7% lower, while theS&P 500 and Nasdaq Composite were both down 0.6%.

There were a number of factors contributing to the negative tone. The yield on the benchmark 10-year Treasury has backed up, with Federal Reserve officials beginning to speculate about tapering the rate of bond purchases in anticipation that fiscal stimulus will bolster the U.S. economy.

Federal Reserve Vice Chair Richard Clarida on Friday said he expected the central bank to keep bond purchases steady through the year. “Rising U.S. bond yields are again being named as the chief culprit [for declining risk appetite], plus a possibly overstretched risk rally,” said Alvin Tan, Asian currency strategist at RBC Capital Markets.

Markets also are keeping a wary eye on politics, as House Speaker Nancy Pelosi said impeachment articles would be introduced if President Donald Trump isn’t removed by invoking of the 25th Amendment. Vice President Mike Pence, the target of Trump’s ire, is reportedly not interested in doing so.

Twitter’s shares traded lower in premarket trade after permanently banning Trump from its platform and removing other prominent Trump supporters.

China introduced new rules that prohibit Chinese companies and individuals from complying with punitive measures mandated by foreign governments, a response to tightening U.S. measures. U.S. Secretary of State Mike Pompeo separately announced a relaxation of restrictions on talks with Taiwan.

The backdrop of the spreading coronavirus also is contributing to the weakness. U.S. hospitalizations from the virus were 129,229 on Sunday, according to the Covid-19 tracking project.

Signature Aviation rose in London after accepting a $4.63 billion bid from Global Infrastructure Partners. Rival private-equity groups Carlyle Investment Group and Blackstone have separately indicated interest in the aviation-services company.

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Global Stocks Pull Back After Strong Gains - Barron's
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