Picture used for illustrative purpose.

World shares dipped on Monday as the US Senate’s passage of a $1.9 trillion stimulus bill put fresh pressure on Treasuries and tech stocks with lofty valuations, raising inflation jitters.

Those concerns overshadowed the prospect of the stimulus giving another boost to the world’s biggest economy and helping global growth rebound faster from the COVID-19 downturn.

Analysts expect an acceleration in inflation, stoked in part by the latest spike in oil prices, which on Monday briefly climbed above $70 for the first time since the pandemic began.

“Between reflation, inflation risk and equity valuations, there’s plenty of reasons for the market to be jittery over the bond re-pricing,” said Natixis strategist Florent Pochon.

“Equity valuations will of course remain a burning issue, in particular for overly rich sectors,” he also said. But he added that sell-offs should be seen as buying opportunities, given that central banks remain “structurally dovish”.

The MSCI world equity index fell 0.2% by 1215 GMT. Gains in European financial stocks were not enough to offset losses in Asia on sliding tech stocks and worries China could tighten policy to rein in pricey valuations.

Nasdaq futures fell 1.2% in European trade, reversing early gains, and S&P 500 futures fell 0.4% as investors looked past the benefits of the fiscal package.

According to JPMorgan, every $1 trillion of fiscal stimulus adds around $4 to $5 to companies’ earnings per share, implying 6% to 7% upside for the remainder of the year.

Equity investors had taken heart on Friday from U.S. data showing nonfarm payrolls surged by 379,000 jobs last month and the jobless rate dipped to 6.2%, in a positive sign for incomes, spending and corporate earnings.

US Treasury Secretary Janet Yellen tried to ease inflation concerns by noting the true unemployment rate was nearer 10% and there was still plenty of slack in the labour market.

Yet yields on U.S. 10-year Treasuries still hit a one-year high of 1.626% after the data, and stood at 1.594% on Monday.

German 10-year yields rose to -0.296%, resisting pressure from rising U.S. borrowing costs amid caution before the European Central Bank meeting on Thursday.

Analysts expect no policy change from the ECB but say it could step up the pace of bond purchases to contain yields. ECB’s weekly bond-buying data is due out later.

“We expect the ECB to combat upward pressure on yields through both action and words. The action should show up in today’s release of PEPP (pandemic emergency purchase programme) purchase data,” UniCredit strategists said in a note.

On foreign exchange markets, the dollar index shot up to levels not seen since late November. It was last at 92.28, up 0.4% on the day and well above its February trough of 89.67. BofA analyst Athanasios Vamvakidis argued the potent mix of U.S. stimulus, faster reopening and greater consumer firepower was a clear positive for the dollar.

“Including the current proposed stimulus package and further upside from a second-half infrastructure bill, total U.S. fiscal support is six times greater than the EU recovery fund,” he said. “The Fed is also supportive with U.S. money supply growing two times faster than the Eurozone.”

The US currency also gained on the low-yielding yen, reaching a nine-month top of 108.6, and against the euro, which fell 0.5% to a three-month low of $1.1860.

MSCI’s emerging-market currency index lost 0.7%, on track for its biggest daily drop since March 2020, as the rising U.S. yields lifted the dollar.

The jump in yields has weighed on gold, which offers no fixed return, and pushed it down 0.8% at $1,687 an ounce and just above a nine-month low.

Oil prices surged Monday and stock markets traded mixed as investors weighed worries over high inflation against the reopening of virus-hit economies.

After Asian indices closed mostly lower, with sharp losses in Hong Kong and Shanghai, Europe pushed higher approaching the mid-way point.

Benchmark oil contract Brent North Sea crude, which has been rising strongly on rebounding demand, broke Monday past $70 per barrel for the first time since January 2020 after an attack on energy facilities in Saudi Arabia.

Wall Street had surged Friday following news that the US economy created 379,000 jobs in February, reaffirming the view that it is on track for a strong recovery.

The report came just ahead of senators passing Joe Biden’s $1.9 trillion rescue plan, setting it up for the US president’s signature by the end of the week.