US stocks wavered on Tuesday, alongside global equities, as investors weighed the worsening coronavirus pandemic against the prospect of more fiscal stimulus in the world’s largest economy.

Wall Street’s benchmark S&P 500 index closed flat for the day, while the tech-heavy Nasdaq Composite notched gains of 0.3 per cent.

In Europe, stocks had a mixed session, with the region-wide Stoxx 600 closing up just 0.1 per cent. Germany’s Xetra Dax slipped by the same magnitude and London’s FTSE 100 dropped 0.7 per cent.

The performance of energy and financials stocks — which performed particularly badly in 2020 — were rare bright spots on both sides of the Atlantic, boosted by expectations that the sectors would benefit from more fiscal support and an economic rebound.

Juliette Cohen, a strategist at CPR Asset Management, said equities were “taking a breath” following strong gains at the start of the year. She did not anticipate a correction, as equities would be supported by further fiscal stimulus in the US — which would encourage the sector rotation from growth stocks such as technology to value sectors including energy and financials.

Salman Baig, multi-asset investment manager at Unigestion, said this week’s pullback in stocks also amounted to “a bit of consolidation” and profit-taking.

Government bonds sold off further on Tuesday before paring those losses, as investors factored in the likelihood of more fiscal stimulus from Joe Biden’s incoming US administration. The yield on the 10-year US Treasury, which broke 1 per cent last week for the first time since March, was up an additional 0.04 percentage points to 1.175 per cent at one point. Yields rise as prices fall.

Despite the initial sell-off, investors took down a wave of new Treasury supply with ease on Tuesday, when the department auctioned $38bn worth of 10-year notes at a yield of 1.164 per cent.

George Lagarias, chief economist at Mazars, said what mattered most for financial markets was “the ability [of governments] to keep stimulus going, and vaccinations”. Although yields had ticked up in recent days, the yield curve was likely to remain fairly flat “because of the debt overhang” and very low inflation expectations, he added.

Democrats introduced an impeachment article in the House on Monday to hold President Donald Trump to account for the violence that erupted in the Capitol last week. A vote could come on Wednesday.

Richard Saperstein, chief investment officer at Treasury Partners, said markets would probably continue to look through the political unrest. Investors were more concerned about the “massive fiscal and monetary stimulus in place, ultra-low interest rates, vaccine distribution, and this unprecedented pent-up demand to return to normal lifestyles”, which should be beneficial for equities in the long term, he said.

Saudi Arabia’s pledge last week to cut oil output, alongside hopes of fuel demand rebounding, helped send Brent crude to a 10-month high of $56.75 a barrel on Tuesday. But significant rises for the global benchmark from here would be less likely, warned traders.

“In our view the market now should stabilise, if anything, rather than boost prices,” said Bjornar Tonhaugen at Rystad Energy. “Returning restrictions and concerns over increasing infections are curbing road fuel demand globally and in Europe in particular.”

In Asia, China’s CSI 300 index jumped 2.9 per cent to its highest level since 2008, with sectors up across the board. Hong Kong’s Hang Seng rose 1.3 per cent. The gains followed falls on Monday, as exchanges moved to adhere to an executive order from Mr Trump banning investment in companies with alleged links to China’s military.

Additional reporting by David Sheppard