By Herbert Lash

NEW YORK (Reuters) – The dollar slipped on Monday and a gauge of global equity markets slid from record highs last week as investors wait to see whether an expected jump in U.S. earnings will justify stock prices already trading at very high premiums.

The smooth auction of $96 billion in new three- and 10-year U.S. Treasury notes kept a move higher in yields in check as the market looked to key data releases this week, including a reading on U.S. consumer price inflation and retail sales.

The dollar slipped toward a three-week low as Treasury yields remained just above recent lows, while oil prices rose on optimism over a rebound in the U.S. economy as coronavirus vaccinations accelerated.

MSCI’s all-country world index, a gauge of equity performance in 49 countries, fell 0.21% from Friday’s record high. The global benchmark’s price-to-earnings ratio is at its highest level since early 2010.

The S&P 500’s P/E ratio on a forward 12-month basis is 23.5, a more than 40% premium to its 20-year average, according to CFRA.

Traders want to see results and whether company guidance supports anticipation of a rebounding U.S. economy, said Fiona Cincotta, senior financial markets analyst at City Index, the retail division of StoneX Financial.

“There is some optimism,” Cincotta said of overall market sentiment. “Slightly more upbeat guidance from the big banks, that’s going to help,” she said.

JPMorgan Chase & Co, the largest U.S. bank by assets, reports earnings on Wednesday, as do Goldman Sachs Group Inc and Wells Fargo & Co. The S&P financials sector hit a record high on Monday before retreating in anticipation of bank results, which start earnings season.

On Wall Street, the Dow Jones Industrial Average fell 0.3%, the S&P 500 lost 0.12% and the Nasdaq Composite dropped 0.39%.

Share prices will likely rise should estimates continue to morph into better-than-expected results and guidance, said Sam Stovall, CFRA chief investment strategist.

Analysts expect profits for S&P 500 firms to show a 25% jump from a year earlier, according to Refinitiv IBES data. That would be the strongest performance for the quarter since 2018.

For a graphic on Lofty valuations:

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Optimism about vaccination programs and an ensuing rebound is driving stocks. Total market capitalization of global equities hit $90 trillion last week, according to Refinitiv data.

For a graphic on Global equities hit $90 trillion market cap:

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European shares eased from record highs as investors held off from making big bets before earnings season. Europe’s broad FTSEurofirst 300 index closed down 0.43%.

The UK’s more export-oriented FTSE 100 fell 0.3%, Germany’s DAX and France’s CAC 40 closed little changed, while Italy’s FTSE MIB gained 0.19%.

Earlier in Asia, Tokyo’s Nikkei edged down 0.77%, and South Korean stocks rose 0.12%.

India’s Nifty 50 index slid 2.4% as the country overtook Brazil with the second-highest number of COVID-19 cases globally.

Chinese blue chips lost 1.5% before the release of a series of economic data from China.

Shares in Alibaba Group Holding Ltd surged 8.6% on relief that China’s record 18 billion-yuan ($2.75 billion) fine on the e-commerce giant, which makes up more than 8% of the MSCI emerging markets index, was not more onerous.

China imposed a sweeping restructuring on Jack Ma’s Ant Group, the fintech conglomerate whose record $37 billion initial public offering was derailed by regulators in November. Alibaba is an affiliate of Ant Group.

U.S. growth and tech stocks saw a revival last week as U.S. 10-year Treasury yields retreated to 1.66%, from a 14-month top of 1.776%.

The 10-year U.S. Treasury note rose 0.5 basis point to 1.6764%.

“Low inflation and dovish central banks should limit the rise in bond yields during the recovery,” said Andrew Pease, global head of investment strategy at Russell Investments.

Data on Tuesday is expected to show U.S. inflation jumped in March. Retail sales data is expected to show a surge, perhaps with a double-digit gain, when a report is released on Thursday.

The dollar softened after the pullback in Treasury yields.

The dollar index fell 0.16%, with the euro up 0.17% to $1.1916. The Japanese yen strengthened 0.31% versus the greenback at 109.39 per dollar.

Gold fell on Monday as the slight uptick in Treasury yields dimmed bullion’s appeal.

Spot gold prices fell 0.62% to $1,732.23 an ounce.

Crude prices remained rangebound as growing expectations of surging U.S. economic activity are balanced by the slow rate of vaccination in Europe and anticipation of additional supply from Iran in coming months.

Brent crude futures rose $0.39 to $63.34 a barrel. U.S. crude futures gained $0.41 to $59.73 a barrel.

(Reporting by Herbert Lash, additional reporting by Ritvik Carvalho in London, Wayne Cole in Sydney; editing by Larry King, Susan Fenton and Dan Grebler)