US Stock Futures Drop as Yields Rise Bad Mood: Markets Wrap

(Bloomberg) — U.S. stock futures extended declines as Treasury yields approached the highest level this year, raising concerns about restrictive monetary policy.

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US stock futures fell 0.4%, signaling a second day of declines on Wall Street, while the European Stoxx 600 rose amid gains for pharmaceutical company Novo Nordisk A/S and online car marketplace Auto Trader Group Plc. The 10-year Treasury yield is hovering near 4.60% after a 15 basis point jump in the past two days.

Global stocks are headed for their worst week since mid-April as expectations for US interest rate cuts dwindle as inflation persists. Another weak US auction result on Wednesday heightened concerns that US deficit financing would push yields higher.

Data this week could be key as investors adjust their expectations for monetary policy: the US publishes GDP numbers later on Thursday, and inflation reports from the US and Europe are due on Friday.

“The market has fallen under the spell of the bond market and high yields,” said Tony Sycamore, market analyst at IG Australia Pty Ltd. Inflation data tomorrow.”

As optimism about U.S. interest rate cuts fades, BlackRock International Ltd. has become “more targeted” with its view on bond duration, committing to the front end and belly of the curve for U.S. Treasuries, according to Karim Chedid, the firm’s head of investment strategy for Europe and the East. Middle and Africa. .

“We see this as the area where you still have the most money in terms of income for stability,” he said in an interview with Bloomberg TV.

While the rally in technology companies is supported by fundamentals and remains one of the “key sector overweights” for the asset management giant, Shadid says there are increasing flows into European and Japanese stocks.

Shadid said that the possibility of the European Central Bank cutting interest rates at its meeting in June is useful, as well as “macro data in Europe reaching its lowest levels, which investors like.” “Earnings have improved significantly in Europe over the past 12 months.”

rand slices

Elsewhere, the rand extended its losses and banking stocks fell as the pace of vote counting increased in the elections in South Africa. It appears that the ruling party will not be able to obtain a parliamentary majority for the first time since it came to power.

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In commodities, crude oil traded flat as traders looked to US inventory data and the OPEC+ meeting at the weekend for more clarity on the supply and demand outlook.

The company’s most prominent features:

• Goldman Sachs analysts initiated coverage of six large-cap pharmaceutical stocks on Thursday, saying “innovation is the key to success.” They give buy ratings to AstraZeneca Plc, Novo Nordisk A/S, and Novartis AG, and are neutral to GSK Plc and Bayer AG. Roche Holding AG has its only sell rating.

• China is preparing to impose a record fine on PricewaterhouseCoopers LLP and suspend some of the global auditor’s local operations over its role in one of the country’s largest alleged financial fraud cases, according to people familiar with the matter.

• Golden Goose is launching a €100 million ($108 million) initial public offering in Milan as the Italian luxury sneaker brand aims to strengthen its capital structure and reduce debt.

• Saudi Arabia is preparing to officially launch a secondary offering of shares in oil giant Aramco on Sunday, a deal that could raise more than $10 billion and would be among the largest of its kind in recent years.

• Brookfield is in exclusive talks to acquire a majority stake in Neoen SA in a deal that values ​​the French renewable energy developer at approximately €6.1 billion.

Main events this week:

• Eurozone economic confidence, unemployment, consumer confidence, Thursday

• US Initial Jobless Claims, GDP, Thursday

• The Fed’s John Williams and Lori Logan speak on Thursday

• Unemployment in Japan, CPI in Tokyo, industrial production, retail sales, Friday

• China’s official manufacturing and non-manufacturing PMI, Friday

• Eurozone consumer price index, Friday

• US consumer income, spending, personal consumption expenditures deflator, Friday

• The Fed’s Rafael Bostic speaks on Friday

Some key movements in the markets:

Stores

• The Stoxx Europe 600 index was up 0.3% as of 10 a.m. London time

• S&P 500 futures fell 0.4%

• Nasdaq 100 futures fell 0.4%

• Dow Jones Industrial Average futures fell 0.8%

• MSCI Asia Pacific Stock Index fell 1%

• MSCI Emerging Markets Index falls 1.3%

Currencies

• The Bloomberg Dollar Spot Index was little changed

• The euro rose 0.1 percent to $1.0815

• The Japanese yen rose 0.5 percent to 156.92 yen to the dollar

• The yuan in external transactions rose 0.3 percent to 7.2532 per dollar

• There was little change in the pound sterling at $1.2713

Digital currencies

• Bitcoin rose 0.4% to $67,681.3

• Ethereum fell 0.4% to $3,735.16

Bonds

• The yield on the 10-year Treasury note fell 2 points to 4.59%.

• The yield on German 10-year bonds fell two basis points to 2.67%.

• The yield on British 10-year bonds fell by three basis points to 4.37%.

Goods

• There was little change in Brent crude

• Gold in spot transactions fell 0.1 percent to $2,335.55 per ounce

This story was produced with assistance from Bloomberg Automation.

-With assistance from Masaki Kondo and Chiranjeevi Chakraborty.

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