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ASX set to dip as Wall Street slumps on rising bond yields

Investors have been keeping a close eye on the bond market in recent weeks, where yields have been rising along with expectations that the economy, and possibly inflation, could be set to pick up as vaccinations increase and coronavirus restrictions on businesses, travel and schooling begin to lift more.

When yields rise quickly, as they have in recent weeks, it forces Wall Street to rethink the value of stocks. Technology stocks are most vulnerable to this reassessment after having soared during the pandemic, making them look pricier than the rest of the market.

“You’re having a fairly healthy and natural consolidation period,” said Mark Hackett, chief of investment research at Nationwide.

Wall Street has been anticipating an improving economy since late last year from the eventual distribution of vaccines, additional stimulus and a steadier reopening, he said.

“The market tends to do better when the good news is further out and struggle more when it is in hand,” he said. “There’s really nothing currently as the next catalyst.”

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Crude oil prices jumped 5 per cent after OPEC members agreed to leave most of their existing oil production cuts in place. That helped send energy company stocks broadly higher. Exxon Mobil rose 3.5 per cent and ConocoPhillips rose 3.1 per cent.

The Senate is moving forward with President Joe Biden’s stimulus bill, with most of the negotiations now happening between the more moderate Democrats in the Senate and the White House.

Investors are also looking ahead to the February jobs report on Friday. Economists surveyed by FactSet expect employers created 225,000 jobs last month. The report also includes numbers for how much wages are rising across the economy, a key component of inflation.

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