U.S. Equity Futures Fall as Treasury Yields Surge: Markets Wrap
(Bloomberg) — Most stocks fell Tuesday amid a jump in Treasury yields as investors girded for interest-rate hikes by the Federal Reserve to quell high inflation.
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Europe’s Stoxx 600 Index declined, with energy the only sector to advance. U.S. equity futures slipped before the market reopens later from a holiday and Asian shares struggled.
Treasuries dropped across the curve, pushing two-year and 10-year yields up to levels last seen before the pandemic roiled markets. Pressure is growing for the Fed to act more quickly to contain price pressures, which are being stoked in part by the rally in oil that’s taken Brent crude to the highest since 2014.
A gauge of the dollar was little changed. The yen initially declined after the Bank of Japan sat pat on policy while nudging up its inflation projection.
Global stocks have retreated this year, hurt by a retreat in U.S. shares. A key question now is whether company profits will revive sentiment by weathering higher costs and challenges from the omicron virus strain.
“It will be interesting to see if investors are tempted back in now that earnings season is underway,” Craig Erlam, senior market analyst at Oanda, wrote in a note. “The emergence of omicron may mean that many companies don’t enjoy the kind of performance that was expected before, but that doesn’t mean there won’t be plenty of positives to take away.”
JPMorgan Chase & Co. strategists contend that global corporate earnings will deliver significant beats this year, again defying doomsayers and skeptics.
In the energy sector, easing concerns about the impact of omicron on demand together with shrinking oil inventories are contributing to forecasts of $100 per barrel crude later this year.
For more market analysis, read our MLIV blog.
What to watch this week:
Goldman Sachs, Morgan Stanley, Bank of America, UnitedHealth Group and Netflix are among companies publishing earnings during the week
U.S. data includes Empire manufacturing Tuesday, housing starts Wednesday and jobless claims Thursday
Interest-rate decisions due from nations including Indonesia, Malaysia, Norway, Turkey and Ukraine, Thursday
EIA crude oil inventory report, Thursday
Some of the main moves in markets:
Stocks
The Stoxx Europe 600 fell 1.1% as of 8:25 a.m. London time
Futures on the S&P 500 fell 1%
Futures on the Nasdaq 100 fell 1.7%
Futures on the Dow Jones Industrial Average fell 0.6%
The MSCI Asia Pacific Index fell 0.2%
The MSCI Emerging Markets Index fell 0.2%
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro was little changed at $1.1404
The Japanese yen was little changed at 114.69 per dollar
The offshore yuan was little changed at 6.3564 per dollar
The British pound was little changed at $1.3646
Bonds
The yield on 10-year Treasuries advanced four basis points to 1.82%
Germany’s 10-year yield was little changed at -0.02%
Britain’s 10-year yield advanced one basis point to 1.20%
Commodities
Brent crude rose 1.4% to $87.69 a barrel
Spot gold fell 0.2% to $1,815.50 an ounce
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