US Treasury prices fell sharply on Monday in a bearish start to 2022 that follows the worst year for the global bond market in more than two decades.

The benchmark 10-year Treasury yield rose by more than 0.1 percentage points, exceeding 1.6 per cent for the first time since the emergence in late November of the Omicron strain of coronavirus, which sent yields tumbling. The two-year yield briefly rose above 0.8 per cent, its highest level since March 2020.

In stocks, the S&P 500 opened higher but then briefly dipped into negative territory, before moving back into positive territory. It was up 0.5 per cent as of mid-afternoon. The US benchmark had been helped at the start of trade by blowout production numbers from Tesla, which lifted its share price. The boost in the afternoon came as Apple’s market capitalisation hit $3tn.

The Europe-wide Stoxx 600 index closed 0.5 per cent higher, having reached a record intraday high on light volume. Germany’s Dax and the Cac 40 in Paris both rose 0.9 per cent. Exchanges in London, Japan and mainland China were closed for holidays.

Monday’s market moves followed the worst year for global bonds since 1999 after central banks signalled that they were prepared to combat inflation pressures with interest rate rises. The withdrawal of stimulus that powered a global economic recovery has so far had only a modest effect on equities, with the S&P 500 plateauing at the end of 2021 but still gaining 27 per cent for the year. In Europe, the Stoxx 600 finished 2021 up 22 per cent.

A survey on the US manufacturing sector, due for publication on Tuesday, along with the monthly jobs report on Friday, will provide clues on whether investors are right to be anticipating at least three Federal Reserve rate rises this year.

“With speculative spirits high, investors will need to gauge return per unit of risk as volatility reappears,” said Sean Darby, an analyst at Jefferies. “Perhaps equity investors should be more concerned that policymakers might get boxed in by trying to tame inflation with higher rates without upsetting asset markets.”

Among Monday’s biggest movers, Tesla surged more than 12 per cent after the carmaker negotiated supply-chain disruption to report forecast-beating deliveries for the fourth quarter.

Rival carmakers gained in response, with Volkswagen and BMW rising more than 2 per cent in Europe. Lufthansa led the travel stocks higher after Citigroup added the airline to its “buy” list in response to optimism about the revived demand for long-haul flights.

Investors were starting the year with several risks bubbling in the background, said Karl Steiner, a strategist at Swedish bank SEB. Evergrande’s notice on Monday that it would again suspend its shares in Hong Kong injected “a bit of uncertainty”, Steiner added.

The property developer has been at the centre of a sector-wide crisis in the world’s biggest emerging markets for months. Hong Kong’s Hang Seng share index fell 0.5 per cent on Monday, with the property development sector off 1.1 per cent.

Mounting tensions between western countries and Russia have also caught investors’ attention, with Joe Biden, US president, warning that Washington would act “decisively” should Russia invade Ukraine.

Oil prices edged higher on both sides of the Atlantic ahead of an Opec meeting on Tuesday to discuss boosting output. Brent crude, the international benchmark, ticked up 1.5 per cent to $78.98 a barrel following reports that Libya’s production had been choked off due to a damaged pipeline.