Stocks slide, bond yields rebound as oil fuels inflation anxiety By Reuters

By Tom Wilson and Alun John

HONG KONG (Reuters) – From Europe to Asia, stocks fell and government bond yields rose on Wednesday as oil prices hit their highest level in seven years, fueling concerns about rising inflation.

The euro fell 1.8%, shaking gains on its best day in 11 weeks on Tuesday, tech stocks were down more than 2% and Germany topped losses at 1.6%.

The mood was ready to hit Wall Street, where US futures indicators were showing losses of 0.9% to 1.1%.

Oil prices hit their highest level since November 2014, with investors worried that soaring energy prices could force central banks to raise rates faster to fight rising inflation.

rose 0.4% to $ 79.22 a barrel, also rising 0.4% to $ 82.87, near a three-year high in the previous session.

Concerns about energy supply and the decision by producers on Monday to stick with a planned increase in production rather than increase it further were behind the increases. [O/R]

Inflation anxiety led to a massive sell-off of longer-term US Treasuries and benchmark Eurozone debt, and supported the dollar.

“Rising prices for oil – and commodities in general in terms of gas and oil – translate into higher bond yields because they have an inflationary implication,” said Mike Bell, global markets strategist at JP Morgan Asset Management.

“The market looks at this and asks” is there a scenario where inflation, everyone thinks, could be transient, a little more persistent? “”

Benchmark 10-year yields rose 4.5 basis points to 1.573% in the Asian session, after climbing nearly 11 basis points in three days. They were last at 1.5519%.

Yields on 20- and 30-year Treasuries also hit their highest level since June. [US/]

Eurozone benchmark bond yields have hit new highs as markets fear inflation may be stronger than expected. The German 10-year yield, the benchmark of the block, reached its highest level since the end of June.

The MSCI Global Equity Index, which tracks stocks from 50 countries, fell 0.4%. The MSCI’s largest Asia-Pacific stock index outside of Japan fell 0.3%.

“Growth started to peak 3-4 months ago, but between November and April last year, markets got used to every data point beating expectations,” said Grace Peters, head of EMEA investment strategy. at JP Morgan Private Bank.

“From April to the present day, we are getting more data volatility and more open data for interpretation. So the market is concerned about the downward path from here.”

Chinese markets remained closed for a public holiday, and shares in cash-strapped developer China Evergrande were suspended after going out of business on Monday pending the announcement of a major transaction.

DOLLAR UP, KIWI DOWN

The dollar edged up against a basket of other major currencies, supported by higher yields, and was heading again towards a one-year high reached last month.

The dollar rose 0.3% to 94.0232, gaining ground during European hours.

The New Zealand dollar extended losses as US yields rose after barely moving on the Reserve Bank of New Zealand which raised its official cash rate for the first time in seven years.

The latest was 0.9% at $ 0.6896.

The euro was stuck below $ 1.16 and lost 0.2% for the last time, barely higher than the 14-month low it hit last week.