(Bloomberg) – European stocks fell along with US equity futures on Tuesday as rising bond yields and commodity prices continued to hammer tech stocks.
The Stoxx 600 index fell as technology lagged for a second day in a row as energy stocks outperformed. HSBC Holdings Plc edged down even after fourth quarter results beat estimates. Hong Kong stocks outperformed, while Japan was closed for holidays. In the United States, futures on the Nasdaq led to declines after the high-tech gauge posted its longest streak of losses in four months.
Bets on nascent inflation boosted by the global economic recovery have tightened control over the stocks that led the rally from the depths of the pandemic a year ago. Treasury yields edged up on Tuesday after the spread between 5 and 30 year yields hit the highest level in more than six years. Copper extended its gains, while WTI crude advanced to $ 63 a barrel.
One concern for investors is that broad benchmarks have already taken into account much of the potential global recovery boosted by vaccines and US stimulus measures. Another is that central banks may eventually start to reconsider the emergency programs that have supported global markets.
“The timing of a downturn is even more uncertain than we realized,” said Lori Calvasina, chief US equity strategy at RBC Capital Markets. “We have the potential to start at any time, but may not emerge until the second half given the lack of short-term catalysts. We don’t see the recent 10-year rate hike as a reason to turn negative on US equities for the year. “
Traders are waiting to hear from Federal Reserve Chairman Jerome Powell when he testifies before the Senate Banking Committee on Tuesday and the House Financial Services Group the next day. He is expected to downplay the risk of inflation despite the size of President Joe Biden’s $ 1.9 trillion coronavirus relief proposal.
Elsewhere, Bitcoin fell below $ 50,000 after an episode of volatility highlighted lingering doubts about the sustainability of the token rally.
Some key events to watch this week:
Fed Chairman Jerome Powell presents the biannual central bank monetary policy report to the Senate Banking Committee on Tuesday.The EIA’s crude oil inventory report is released on Wednesday.The finance ministers and Group of 20 central bankers will meet practically on Friday. US Treasury Secretary Janet Yellen will be among the attendees.
Here are some of the main movements in the markets:
Futures contracts on the S&P 500 index fell 0.1% at 9:16 a.m. London time. The Stoxx Europe 600 index fell 0.6%. The MSCI Asia Pacific index rose 0.2%. The MSCI Emerging Market Index changed little.
The Bloomberg Dollar Spot Index was little changed: the euro was little changed at $ 1.2152, the British pound rose 0.1% to $ 1.4074, the onshore yuan strengthened 0.1% at 6.461 per dollar, the Japanese yen weakened 0.2% to 105.24 per dollar
The yield on 10-year Treasuries gained one basis point to 1.37%. The yield on two-year Treasuries fell less than a basis point to 0.11%. Germany’s 10-year yield rose four basis points to -0.30%. The yield jumped four basis points to 0.721%. Japan’s 10-year yield was unchanged at 0.125%.
West Texas Intermediate crude rose 1% to $ 62.30 a barrel, crude 1.2% to $ 66.03 a barrel, while gold fell 0.1% to 1808, $ 12 per ounce.
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