LONDON: World share markets inched higher on Wednesday after a stunning reboot in U.S. tech stocks, while the dollar and benchmark government yields both ticked up ahead of a key U.S. Treasury auction and inflation reading later.
Mikhail Zverev, head of global equities at Aviva Investors, said Tuesday's wild moves in big U.S. tech underscored how volatile markets, which are increasingly dominated by super-sized passive funds, are likely to be this year as the world tries to reset after the COVID-19 pandemic. News that a US$1.9 trillion U.S. coronavirus relief package was nearing final approval had sparked a global spike in bond yields on Monday. That had pushed the Nasdaq more than 10per cent below its Feb. 12 closing high, confirming a correction for the index.
"It has priced in future normalisation of the Fed's monetary policy, the Fed's policy becoming eventually neutral. But it has not yet priced in the chance of its policy becoming tighter."Some investors see a real risk of an overheated U.S. economy and higher inflation on the back of the planned government spending boom.
In foreign exchange markets, the dollar was supported by expectations of faster U.S. economic recovery. Oil prices, which have surged 30per cent since the start of the year, steadied meanwhile as concerns over a supply disruption in Saudi Arabia eased.