U.S. government borrowing costs advanced for a sixth week, hurting tech stocks. This is because the investors are betting on rising interest rates, while three-year high oil prices ignited the energy sector. The encouragement for investors came from an easing in Sino-U.S. tensions and Chinese authorities’ decision to pump in more cash to offset the fallout from real estate firm Evergrande’s woes. The Germany’s election outcome ruled out a pure left-wing coalition government.
U.S. indices were mixed with the industrials-heavy Dow Jones index. Tim Ghriskey, chief investment strategist at Inverness Counsel in New York said that the technology stocks are higher valuation. This means that we are paying for the future growth. And the higher interest rates are a brake on it. Tech shares tend to underperform, while the yields were rising. The Dow Jones Industrial Average rose 71.37 points. The S&P 500 lost 12.37 points and the Nasdaq Composite dropped 77.73 points. Europe’s STOXX 600 index ended lower. Germany’s blue-chip DAX rose 0.3%.
The global inflation will prove longer-lasting than anticipated. This forces the central banks to act and benefiting so-called reflation investments. Fahad Kamal, CIO at Kleinwort Hambros in London said that they have a strong economic macro story that underpinned everything. Kamal noted that optimism was reflected in central banks. Oil futures have climbed around $9 a barrel over September. U.S. crude futures settled up 2% at $75.45 per barrel. Brent crude futures settled at $79.53 per barrel. Goldman Sachs forecast Brent to hit $90 per barrel by year-end. They stated that the current global oil supply-demand is larger than they expected. The portfolios are being repositioned by the investors. U.S. gold futures settled unchanged at $1,752.