Friday 17 August 2018

Global shares hit a losing streak on cost warnings

Markets Report

Global shares were on their way to the longest losing streak of the year yesterday as an advance in US bond yields beyond 3pc and warnings from top global firms about rising costs fed fears that a boom in earnings may have peaked (stock picture)
Global shares were on their way to the longest losing streak of the year yesterday as an advance in US bond yields beyond 3pc and warnings from top global firms about rising costs fed fears that a boom in earnings may have peaked (stock picture)
Independent.ie Newsdesk

Independent.ie Newsdesk

Global shares were on their way to the longest losing streak of the year yesterday as an advance in US bond yields beyond 3pc and warnings from top global firms about rising costs fed fears that a boom in earnings may have peaked.

Falls in Asia's and then Europe's main bourses pushed the 47-country MSCI world share index down for a fifth day running to its lowest level for more than two weeks.

Tech-heavy Taiwan shares had hit two-month lows as worries about a slowdown in gadget demand spread, while oil firms also eased as crude prices came off 3-1/2 year highs.

Wall Street looked set to follow suit as the benchmark US 10-year Treasury yield continued to push above 3pc, having broken the psychologically key level on Tuesday for the first time since the start of 2014.

It has been down to a mix of factors. A strong US economy and rising commodity prices which are increasing the chance of more US interest rate hikes, as well as higher debt and improving relations between Washington and China and North Korea.

"The now healthier global economy justifies these higher yields," JPMorgan Asset Management's Seamus Mac Gorain said.

"We expect 10-year Treasuries (bond yields) to end the year between 3pc and 3.5pc. A move beyond this level would likely require an acceleration of inflation in the eurozone and Japan, which is not yet evident," he said.

In Dublin the main Iseq share index was weaker, but there was volatility in both directions.

AIB shares were down 2.78pc after its annual general meeting, where a board push to restore executive bonuses was heavily defeated, even drawing criticism from EU bank supervisors

CRH shares were up strongly in the afternoon, more than reversing an earlier decline after the company announced a €1bn share buyback scheme.

Eurozone bond yields - or borrowing costs - were dragged higher ahead of today's European Central Bank (ECB) meeting.

Markets want to know when the ECB plans to wind down its €2.55-trn stimulus programme, and whether a recent run of weaker economic data will temper that action.

(Reuters)

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