Australian bond futures have fallen after concerns about Greece’s debt swap deal and a European recession drove global stock markets and risk currencies lower.
Westpac senior market strategist Damien McColough said negative investor sentiment saw a move away from equities to bonds overnight.
“There has been a risk-off theme in global markets overnight and that has driven a rally of Aussie bonds,” he said.
Global stock markets tumbled on Tuesday night with the Dow Jones falling 1.57 per cent during the New York session and Frankfurt’s DAX 30 closing down 3.40 per cent while London’s benchmark FTSE 100 index dropped 1.86 per cent.
The falls came as it was revealed Europe’s economy contracted 0.3 per cent in the December quarter, raising fears of a mild recession.
However, Mr McColough said, there were a number of factors involved in the shift in sentiment, including concerns about Greece’s debt swap deal and investors taking profits following the strong performance of equities markets so far this year.
“It’s a combination of a few things, all of which were pointing in the same direction.”
Mr McColough said traders would closely watch the release of Australian gross domestic product (GDP) data on Wednesday.
At 0830 AEDT on Wednesday, the December 10-year bond futures contract was trading at 95.990 (implying a yield of 4.010 per cent) up from 95.945 (4.055 per cent) on Tuesday.
The December three-year bond futures contract was at 96.410 (3.560 per cent), up from 96.350 (3.650 per cent).
