Global equities slipped yesterday as US bond yields approached the three per cent level that has triggered market spasms in the past and investors awaited earnings results from some of the world’s biggest firms.

Equity markets which have risen for the past two weeks, have come under pressure as oil’s latest moves higher have fuelled inflation worries and pushed up government bond yields – the yield on 10-year US Treasuries hit its highest level since January 2014 at 2.99 per cent.

That drove the gap – or spread – with German bonds to the widest in 29 years while lifting the dollar almost half a per cent.

“Brent crude is now close to $75 (a barrel) and that has had a knock-on effect on government bonds,” said DZ Bank analyst Rene Albrecht.

“With pressure from oil, and also aluminium and steel prices, the inflation topic has made a kind of comeback after being derailed by the trade dispute headlines.”

Oil prices edged down but stayed near their highest since late-2014, with futures around $74 per barrel.

Aluminium prices leapt again, though, to add to this month’s 25 per cent surge following US sanctions on Russia’s producer-giant Rusal.

On the economic front, a global round of economic surveys should show if economic softness in the first quarter was a passing phase linked to wintry weather and Lunar New Year holidays in Asia. Readings from Japan, France and Germany were all relatively reassuring

On the geopolitical front too, there was plenty to digest.

North Korea said on Saturday it would suspend nuclear and missile tests and scrap its nuclear test site.

Talk of a trip by the US Treasury Secretary Steven Mnuchin to China also fuelled hopes that trade tensions between the world’s two biggest economies may be thawing.

But the rise in bond yields overshadowed these positives.

MSCI’s world index fell 0.25 per cent after Asia shed 0.5 per cent, while European bourses also slipped, after results from Switzerland’s biggest bank, UBS, disappointed.

UBS shares fell four per cent at one point yesterday.

All eyes are now on US earnings, with more than 180 companies in the S&P500 reporting results this week. These include tech giants Amazon, Alphabet, Facebook, Microsoft, as well as Boeing and Chevron.

S&P 500 companies are expected to report their strongest first-quarter profit gains in seven years. Of the 87 companies that have reported so far, 79.3 per cent have topped profit expectations, according to Thomson Reuters.

Fears are the rise in bond yields could further derail world stocks which stand some seven per cent off end-January peaks.

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