GLOBAL MARKETS – Global stocks dip as bond yields and commodities rise

* European stocks sink

* Wall Street Futures Down 0.85%

* Chart: overall performance of assets tmsnrt.rs/2yaDPgn

* Chart: global exchange rates tmsnrt.rs/2egbfVh

LONDON, Feb.22 (Reuters) – Global equities fell on Monday as expectations of faster economic growth and inflation weighed on bonds and boosted commodities, while rising real yields returned stock valuations strained in comparison.

The MSCI All Country World Index, which tracks stocks from 49 countries, was down 0.25% as of noon in London.

The pan-European STOXX 600 index fell 0.6% to its lowest level in 10 days. The German DAX and the French CAC 40 and the UK FTSE 100 fell 0.5% each. Spain’s IBEX 35 index and Italy’s FTSE MIB each lost 0.6%.

S&P 500 futures fell to their lowest level since February 5, down 0.85% on the day.

Bonds have been battered by the prospect of a stronger economic recovery and increased borrowing as President Joe Biden’s $ 1.9 trillion stimulus package progresses.

Federal Reserve Chairman Jerome Powell is giving his biannual testimony to Congress this week and will likely reaffirm his commitment to maintaining extremely easy politics for as long as it takes to push inflation up.

“The coming week is relatively thin on the international data agenda, but after the recent rise in long bond yields, hearings for Fed Chairman Powell in both houses of Congress (Tuesday / Wednesday) will generate great interest.” , said Elisabet Kopelman, US economist. at SEB.

“The fact that the most recent rise in long-term bond yields was driven by higher real interest rates and not just inflation expectations increases the likelihood of an accommodating message.”

European Central Bank President Christine Lagarde is also expected to appear conciliatory in a speech later on Monday.

Yields on 10-year Treasuries have already reached 1.38%, breaking the level of 1.30% and taking the rise for the year so far to 43 basis points.

BofA analysts noted that 30-year bonds had returned -9.4% year-to-date, the worst start since 2013.

“Real assets far outweigh financial assets in 21, as cyclical, political and secular trends point to higher inflation,” the analysts said in a note. “Raw materials in full swing, the energy laggards in vogue, materials in secular ruptures.”

Earlier in Asia, the largest MSCI index of Asia-Pacific stocks outside of Japan fell 1.18%, after slipping from a record high last week as rising US bond yields disrupted Investors.

Japan’s Nikkei recovered 0.8% and South Korea 0.1%, but Chinese blue chips lost 1.4%.

COPPER RECOVERY One of the stars has been copper, a key component of renewable technologies, which climbed 7.7% last week to a nine-year high. The broader LMEX base metals index climbed 5.5% on the week.

Oil prices followed the run, helped by tight supplies and freezing weather, giving Brent gains of 22% for the year so far.

On Monday, Brent futures were up 0.7% to $ 63.33 a barrel. US crude added 0.7% to $ 59.65.

All of this has been a boon for commodity-linked currencies, with the Canadian, Australian and New Zealand dollars all higher for the year so far.

Sterling hit a three-year high of $ 1.4050, aided by one of the fastest vaccine deployments in the world. England will ease lockdown restrictions every five weeks, Sky News reported on Monday, hours before Prime Minister Boris Johnson announced details of his roadmap to reopen the country.

The US dollar index was relatively constrained, with downward pressure from the country’s growing double deficit offset by higher bond yields. The index was the last at 90.342, not far from where it started the year at 90.260.

The rise in Treasury yields helped the dollar gain against the yen at 105.60, as the Bank of Japan actively restricts yields in its country.

The euro remained stable at $ 1.2135, stuck between support at $ 1.2021 and resistance around $ 1.2169.

Gold is a commodity that is not doing as well, partly because of rising bond yields and partly because investors are wondering if cryptocurrencies could be a better hedge against inflation.

Gold was $ 1,795 an ounce, having started the year at $ 1,896. Bitcoin was down 5.8% on Monday at $ 54,127, a record $ 58,354.