BlackRock still backing stocks after bond market turbulence

FILE PHOTO: A sign for BlackRock Inc hangs above their building in New York
FILE PHOTO: A sign for BlackRock Inc hangs above their building in New York U.S., July 16, 2018. REUTERS/Lucas Jackson

March 2, 2021

LONDON (Reuters) – The world’s biggest asset manager BlackRock is still backing stocks after recent market turbulence triggered by rising global bond market borrowing costs.

World stocks have seen two heavy weekly falls since late January as bets on a strong post-COVID rebound in the global economy have pushed U.S. government bond yields, the main driver of borrowing costs, up roughly 50%.

“We still believe the new nominal will support equities and risk assets over the next six to 12 months,” BlackRock’s Investment Institute economists said, referring to an expectation the world’s leading central banks will keep bond yields low.

In recent weeks, the fund giant, which manages nearly $9 trillion worth of assets, mainly in passive funds, has turned “overweight” equities on a “strategic horizon” due to “a better outlook for earnings amid moderate valuations”.

(Reporting by Marc Jones; editing by Simon Jessop)