Friday (February 26) afternoon Asian market, the market volatility: gold short – term sharp fall lost 1760, Asian stocks fell into a piece, U.S. stock futures plunged…
Spot gold fell $10 short – term, at one point hit $1,760 an ounce, down nearly 0.5% on the day. COMEX gold futures, meanwhile, fell below $1,760 an ounce, down 1.03% on the day.
Spot silver fell more than 1 percent, once lost the key $27 mark. Comex silver futures fell below $27 an ounce, down more than 2 percent on the day.
Crude oil prices also took profits. WTI crude futures fell more than 1% to $62.57 a barrel in the short term. Brent crude fell nearly 3% to the key $65 mark.
Stocks also sold off. Australia’s S&P/ASX200 index closed down 2.35%; Japan’s Topix index fell 3 per cent. The MSCI Asia Pacific index fell 2.7 percent, its biggest one-day drop since March last year.
The dollar is the only one trying to find its footing in the current market, currently trading around 90.40.
Behind this sudden market, and continued soaring yields related to the United States debt.
Inflation-adjusted bond yields have accelerated in recent days, suggesting a growing belief that central banks may start to trim their ultra-loose policies, even as officials maintain a dovish tone.
“This is a global move,” said Vassili Serebriakov, a currency strategist at UBS in New York. “The rise in bond yields indicates that people expect a strong economic rebound after the outbreak.”
Recently, the yield on the benchmark 10-year Treasury note hit a one-year high of 1.614 percent, prompting investors worried about valuations to lock in profits from some of the strongest growth stocks. That sent U.S. stocks tumbling on Thursday, with the Nasdaq recording its biggest one-day percentage drop in four months.
The S&P 500 dividend yield’s advantage over benchmark Treasury yields during the pandemic has disappeared. The move could make stocks look less attractive relative to safer U.S. Treasuries.
“It’s about yield. At 1.5 percent, the yield is in line with the S&P 500 dividend yield, “said Peter Tuz, president of Chase Investment Counsel in Counsel, N.Y., in Charlottesville, Virginia.” And the 10-year has no capital risk. All of a sudden, it’s competing with stocks.”
“The market has done well, but it has changed the risk/reward,” said Howard Silverblatt, senior index analyst at S&P Dow Jones Indexes Ltd. “Treasuries are seen as a safer investment. “All stocks carry risk, even dividend-paying stocks.”
The surge in U.S. bond yields has also dented gold’s appeal. While gold is often sought as a hedge against inflation, rising bond yields undermine that status by increasing the opportunity cost of holding bullion.
“We’ve seen bond yields move higher in the last couple of weeks, which has again taken some of the momenta out of the gold market,” said David Meger, director of metals trading at High Ridge Futures.