(Adds details, updates prices)
* World shares weaken, Nasdaq futures down 1.2%
* U.S. Senate passes $1.9 trillion stimulus
* Dollar gains on euro, yen as U.S. yields race ahead
* Brent rises past $70 for first time since pandemic began
* 2020 asset performance: http://tmsnrt.rs/2yaDPgn
* World FX rates in 2020: http://tmsnrt.rs/2egbfVh
By Danilo Masoni
MILAN, March 8 (Reuters) - World shares dipped on Monday as
the U.S. Senate's passage of a $1.9 trillion stimulus bill put
fresh pressure on Treasuries and tech stocks with lofty
valuations, raising inflation jitters.
Those concerns overshadowed the prospect of the stimulus
giving another boost to the world's biggest economy and helping
global growth rebound faster from the COVID-19 downturn.
Analysts expect an acceleration in inflation, stoked in part
by the latest spike in oil prices, which on Monday briefly
climbed above $70 for the first time since the pandemic began.
"Between reflation, inflation risk and equity valuations,
there's plenty of reasons for the market to be jittery over the
bond re-pricing," said Natixis strategist Florent Pochon.
"Equity valuations will of course remain a burning issue, in
particular for overly rich sectors," he also said. But he added
that sell-offs should be seen as buying opportunities, given
that central banks remain "structurally dovish".
The MSCI world equity index .MIWD00000PUS fell 0.2% by
1215 GMT. Gains in European financial stocks were not enough to
offset losses in Asia on sliding tech stocks and worries China
could tighten policy to rein in pricey valuations.
Nasdaq futures NQc1 fell 1.2% in European trade, reversing
early gains, and S&P 500 futures ESc1 fell 0.4% as investors
looked past the benefits of the fiscal package.
According to JPMorgan, every $1 trillion of fiscal stimulus
adds around $4 to $5 to companies' earnings per share, implying
6% to 7% upside for the remainder of the year.
Equity investors had taken heart on Friday from U.S. data
showing nonfarm payrolls surged by 379,000 jobs last month and
the jobless rate dipped to 6.2%, in a positive sign for incomes,
spending and corporate earnings. U.S. Treasury Secretary Janet Yellen tried to ease inflation
concerns by noting the true unemployment rate was nearer 10% and
there was still plenty of slack in the labour market.
Yet yields on U.S. 10-year Treasuries US10YT=TWEB still
hit a one-year high of 1.626% after the data, and stood at
1.594% on Monday.
German 10-year yields DE10YT=RR rose to -0.296%, resisting
pressure from rising U.S. borrowing costs amid caution before
the European Central Bank meeting on Thursday.
Analysts expect no policy change from the ECB but say it
could step up the pace of bond purchases to contain yields.
ECB's weekly bond-buying data is due out later.
"We expect the ECB to combat upward pressure on yields
through both action and words. The action should show up in
today's release of PEPP (pandemic emergency purchase programme)
purchase data," UniCredit strategists said in a note.
On foreign exchange markets, the dollar index =USD shot up
to levels not seen since late November. It was last at 92.28, up
0.4% on the day and well above its February trough of 89.67.
BofA analyst Athanasios Vamvakidis argued the potent mix of
U.S. stimulus, faster reopening and greater consumer firepower
was a clear positive for the dollar.
"Including the current proposed stimulus package and further
upside from a second-half infrastructure bill, total U.S. fiscal
support is six times greater than the EU recovery fund," he
said. "The Fed is also supportive with U.S. money supply growing
two times faster than the Eurozone."
The U.S. currency also gained on the low-yielding yen,
reaching a nine-month top of 108.6 JPY= , and against the euro,
which fell 0.5% to a three-month low of $1.1860 EUR= .
MSCI's emerging-market currency index .MIEM00000CUS lost
0.7%, on track for its biggest daily drop since March 2020, as
the rising U.S. yields lifted the dollar. The jump in yields has weighed on gold, which offers no
fixed return, and pushed it down 0.8% at $1,687 an ounce XAU=
and just above a nine-month low.
Oil prices rose to their highest levels in more than a year
after Yemen's Houthi forces fired drones and missiles at the
heart of Saudi Arabia's oil industry on Sunday, raising concerns
about production. Prices had already been supported by a decision by OPEC and
its allies not to increase supply in April. O/R
Brent LCOc1 later pared most gains and rose 0.3% to $69.6
a barrel. U.S. crude CLc1 added 0.3% to $66.8.