World stocks slip from six-year high

Last Updated: Mon, Apr 07, 2014 08:35 hrs

World stocks slipped from last week's six-year high on Monday on concerns about technology shares, while speculation the European Central Bank will ease policy further pushed down European bond yields.

The Nasdaq suffered its biggest decline since February on Friday as high-flying and high-growth shares mostly in the tech and biotech sectors extended their recent sell-off, with sentiment spilling into Asia.

The pull-back came after the Dow and S&P 500 indexes hit record highs after March U.S. jobs data soothed concerns about the health of the economic recovery there but eased fears of an early interest rate hike.

"This could be the start of a 'profit taking' consolidation period. People should buy only when the pull-back is done, while it could also be time to hedge the portfolios," said Gerard Sagnier, analyst at brokerage Aurel BGC in Paris.

The MSCI world equity index fell a third of a percent, having hit levels not seen since late 2007 on Friday.

The Nikkei fell 1.6 percent, led lower by index heavyweight Softbank which fell over 4 percent in brisk turnover.

SoftBank shares have become very sensitive to moves in U.S. tech stocks ahead of Alibaba's IPO, which is expected to become one of the largest offerings in history. SoftBank holds around a 37 percent stake in the Chinese e-commerce giant.

European stocks were down around 1 percent while emerging stocks outperformed with a decline of just 0.15 percent following three straight weeks of gains.

The dollar was steady against a basket of six major currencies, while the euro was under pressure from expectations the ECB may undertake a programme of asset purchases this year to support the economy.

Such speculation boosted German and Italian bond futures, following a rally on Friday after a German newspaper said the ECB had modelled the effects of buying a trillion euros of assets to ward off deflation.

That followed comments by ECB President Mario Draghi that policymakers were unanimous that asset purchases, known as quantitative easing or QE, might be needed to tackle persistently low inflation.

"At the moment periphery, especially now we have got this QE talk, is massively supported. That's the most obvious trade in town," a trader said.

U.S. crude oil fell 0.6 percent to $100.50 a barrel after worries about supply disruption eased as Libyan rebels occupying four eastern oil ports agreed to gradually end their eight-month-old blockade.

The 10-year U.S. Treasury yield stood at 2.720 percent, having fallen on Friday after the jobs report eased concerns about an early interest rate hike.

Short- and medium-term Treasuries yields had surged after Fed Chair Janet Yellen suggested on March 19 that the central bank could raise interest rates earlier than expected. Yellen was more dovish in a speech on March 31, when she defended the Fed's supportive measures.

Short- and medium-dated Treasuries notes are viewed as most vulnerable to a hike in overnight interest rates, which are currently near zero.

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