London: Stocks slump despite a drop in bond yield

London, Feb 26 (AFP/APP): Stocks slumped on Friday despite a drop in bond yields, as rattled investors did not step in to pick up bargains. The dollar rose against its main rivals ahead of Congress later Friday voting on US President Joe Biden’s enormous $1.9-trillion economic rescue package.

Oil prices fell after striking 13-month peaks Thursday on keen demand. Vaccine rollouts, slowing Covid infection rates and Biden’s stimulus package have repeatedly sent stocks up in recent weeks. But now they are proving to be a double-edged sword for traders as they weigh the much-needed return to pre-pandemic life with the prospect that prices could rise, possibly sharply.

There is a worry that surging inflation could threaten one of the key pillars of the rally on world markets from their March nadir — record-low borrowing costs. Alarm bells have been ringing for weeks as the yield on benchmark 10-year US Treasuries climbed to one-year highs earlier this week as investors moved out of the safe haven of government bonds.

Yields have advanced around the world, from New Zealand and Australia to France, Germany and Japan. Soaring US bond yields sparked a hefty sell-off on Wall Street on Thursday — led by the tech-heavy Nasdaq’s 3.5 percent plunge.