Dhara Ranasinghe shows us the market day ahead.

Although some were concerned about the rising yields on sovereign bonds, global stock markets seem to now be able to take the seemingly constant rise in borrowing costs with a positive attitude.

Wall Street was up sharply on Tuesday. Stock futures indicate a positive open for stock markets later. However, 10-year Treasury yields still remain near their lowest levels since the end of 2019. [.N]

Asian shares outside Japan rose 1.5%. Futures suggest that the firm is open to European stock options.

Faced with a pivotal hawkish move by central banks, equity investors now focus on the pluses. For example, banks should be able to benefit from higher rates.

Notable in Tuesday’s Wall Street rallies – 1%+ gains for Bank of America, JPMorgan (NYSE) and Wells Fargo (NYSE:).

An index sub-index listing European banks stocks has reached its highest point since July 2018, almost 4 percent higher than Thursday’shawkish message by the European Central Bank.

Talking of central banks: Japan is a place to focus more on. Rising yields in Japan could put the Bank of Japan at risk of losing its resolve to maintain its 10% target for 10-year yields.

The Wednesday increase was 0.215%. This is the highest rate since January 2016, and still within the bounds of the implicit ceiling of 0.25% that the BOJ places around its 0% target.

In order to control rising borrowing costs, the BOJ can now purchase unlimited 10-year JGBs for a predetermined price. It’s worth your attention.

Markets should be more informed by key developments on Wednesday

CBA announces share buyback after first-half profit increase on Australian home boom

Unexpectedly, German Exports Rise in December

Bank of Iceland rate determination

– Bank of England Chief economist Huw Pill, Fernandez-Bollo, ECB Bank Supervisor Fernandez-Bollo and Bank of Canada Governor Tiff McKem speak. Loretta Mester is the Cleveland Fed President

– US 10-year note auction

US earnings: CVS. SME. Teva. Yum Fox Corp. , Pepsi, Mattel (NASDAQ:), Walt Disney (NYSE :), Motorola (NYSE :), MGM Manulife, Uber, (NYSE 🙂

– European earnings: Deutsche Borse, L’Oreal, Glaxo Smith Kline, Mediobanca (OTC:), AP Moeller-Maersk, Siemens energy, Amundi, Barrat, Smurfit Kappa, Pandora (OTC:), Aegeon, Equinor, Handelsbanken, Equinor

-Emerging market central banks: India,  Thailand, Romania

-Russian CPI, Dec retail sales

(Graphic: Benchmark bond yields on the rise, https://fingfx.thomsonreuters.com/gfx/mkt/gdvzynbngpw/MorningBid0902.PNG)