(Bloomberg) — European stocks dropped with U.S. equity futures on Tuesday as the jump in bond yields and commodity prices continued to hammer technology shares.
The Stoxx 600 Index turned lower, with tech among the laggards for a second straight day while energy shares outperformed. HSBC Holdings Plc edged lower even after results beat estimates in the fourth quarter. Hong Kong stocks outperformed, while Japan was shut for a holiday. In the U.S., Nasdaq futures led declines after the tech-heavy gauge posted its longest losing streak in four months.
Budding inflation bets spurred by the global economic recovery have added to scrutiny on stocks that have led the rally from the depths of the pandemic a year ago. Treasury yields edged up on Tuesday after the gap between 5- and 30-year yields touched the highest level in more than six years. Copper extended gains, while WTI crude rose toward $63 a barrel.
One concern among investors is that broad benchmarks have already priced in much of the prospective global recovery spurred by vaccines and U.S. stimulus. Another is that central banks may eventually start reconsidering emergency programs that have supported global markets.
“The timing of a pullback is even more uncertain than we previously understood,” said Lori Calvasina, head of U.S. equity strategy at RBC Capital Markets. “One has the potential to start at any time, but may not emerge until the second half given a lack of near-term catalysts. We don’t view the recent rise in 10-year yields as a reason to turn negative on U.S. equities for the year.”
Traders are waiting to hear from Federal Reserve Chair Jerome Powell when he testifies to the Senate Banking Committee on Tuesday and the House Financial Services panel the following day. He’s expected to play down the risk of inflation despite the size of President Joe Biden’s $1.9 trillion coronavirus relief proposal.
Elsewhere, Bitcoin retreated below $50,000 after a bout of volatility highlighted lingering doubts about the durability of the token’s rally.
Some key events to watch this week:
Fed Chair Jerome Powell delivers the central bank’s semi-annual monetary policy report to the Senate Banking Committee on Tuesday.EIA crude oil inventory report is out Wednesday.Finance ministers and central bankers from the Group of 20 will meet virtually Friday. U.S. Treasury Secretary Janet Yellen will be among the attendees.
These are some of the main moves in markets:
Stocks
Futures on the S&P 500 Index dipped 0.1% as of 9:16 a.m. London time.The Stoxx Europe 600 Index fell 0.6%.The MSCI Asia Pacific Index advanced 0.2%.The MSCI Emerging Market Index was little changed.
Currencies
The Bloomberg Dollar Spot Index was little changed.The euro was little changed at $1.2152.The British pound advanced 0.1% to $1.4074.The onshore yuan strengthened 0.1% to 6.461 per dollar.The Japanese yen weakened 0.2% to 105.24 per dollar.
Bonds
The yield on 10-year Treasuries gained one basis point to 1.37%.The yield on two-year Treasuries dipped less than one basis point to 0.11%.Germany’s 10-year yield advanced four basis points to -0.30%.Britain’s 10-year yield jumped four basis points to 0.721%.Japan’s 10-year yield was unchanged at 0.125%.
Commodities
West Texas Intermediate crude increased 1% to $62.30 a barrel.Brent crude gained 1.2% to $66.03 a barrel.Gold weakened 0.1% to $1,808.12 an ounce.
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