* Europe and Asia markets higher after U.S. tech stock surge
* Steadier bonds ease investor anxiety
* Market still wary of bond yields ahead of auctions
By Marc Jones
LONDON, March 10 (Reuters) - 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.
But gains were subdued after Tuesday's 20% surge in electric
car doyen Tesla TSLA.O , 4% jump in the Nasdaq and biggest
one-day gain for global heavyweights Amazon AMZN.O and
Microsoft MSFT.O in well over a month. .N
Asia had bounced back from a two-month low as China's
markets shrugged off their recent central bank policy tightening
worries and Europe .STOXX was helped early on by a new
all-time high for Germany's DAX. .GDAXI .EU
The dollar and bond yields ticked up too. Traders were
focused on the U.S. bond auction and inflation data later, as
well as Thursday's European Central Bank meeting where it is
expected to respond to the recent jump in borrowing costs.
GVD/EUR
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.
"The winds are blowing harder now. The world isn't a more
dangerous place, a mild increase in interest rates is not a
cataclysmic event... but there is now the big-herd mentality
with a greater propensity for rotations," he said.
"They are moving more frequently, they are moving faster and
they are leaving a trail of inefficiency," leaving markets
vulnerable to big swings, he added.
Gains in Asian stocks overnight came after Chinese shares
had fallen to their lowest levels since mid-December the
previous day on the prospect of tighter policy and a slowing
economic recovery. News that a $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 10% below
its Feb. 12 closing high, confirming a correction for the index.
The yield on benchmark 10-year notes US10YT=RR was at
1.540%, having peaked at 1.626% on Friday, after Tuesday's
auction of $58 billion in U.S. 3-year notes was well received.
Yet, many market investors remained on edge, with the next
tests of investor appetite for government debt due later this
week in the form of 10-year and 30-year auctions.
"Although the bond market has steadied a bit, pressures will
remain," said Naokazu Koshimizu, senior rates strategist at
Nomura Securities.
"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."
INFLATION PALPATIONS
Some investors see a real risk of an overheated U.S. economy
and higher inflation on the back of the planned government
spending boom.
U.S. consumer price data due at 1330 GMT is expected to show
a slight acceleration in the overall inflation in February, with
analysts expecting further gains in coming months due to base
effects from a severe economic downturn in early 2020.
The speedier rollout of COVID-19 vaccines in some countries
and the planned U.S. stimulus package helped underpin a brighter
global economic outlook, the Organisation for Economic
Cooperation and Development said on Tuesday, as it raised its
2021 growth forecast. In foreign exchange markets, the dollar was supported by
expectations of faster U.S. economic recovery.
The euro eased as much 0.25% to $1.1871 EUR= , not far from
Tuesday's 3 1/2-month low of $1.18355. The yen changed hands at
108.70 per dollar JPY= , having hit a nine-month low of 109.235
set the previous day.
The Australian dollar shed 0.6% at one point to $0.7672
AUD=D4 as well after the country's top central banker rebuffed
market chatter about early rate increases. AUD/ Oil prices, which have surged 30% since the start of the
year, steadied meanwhile as concerns over a supply disruption in
Saudi Arabia eased.
Brent crude futures LCOc1 recovered from an overnight
wobble to sit at $67.45 per barrel while U.S. crude futures
CLc1 hovered at $64.18 a barrel, after hitting a near 2
1/2-year high of $67.98 on Monday.
Precious metal gold XAU= eased 0.1% to $1,714.55 per ounce
after rising more than 2% on Tuesday.
"There's an element of corrective price action after a very
spirited gold rebound," DailyFX currency strategist Ilya Spivak
said.
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