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(Bloomberg) – Stocks slipped along with US and European equity futures on Thursday after a surge in bond yields rekindled valuation concerns. Falling Chinese stocks drove stock losses in Asia.
MSCI Inc.’s Asia-Pacific gauge saw its worst drop this week. The tech sector struggled as real estate, financials and energy stocks outperformed amid a shift to value segments. Futures on the S&P 500 and Nasdaq 100 fell, but were previously low after an overnight collapse of both indices.
Yields on benchmark Treasuries edged down in Asian exchanges after approaching 1.5% on Wednesday. A market gauge of inflation expectations over the next five years has reached its highest level since 2008. Traders also assessed data indicating a still uneven economic recovery from the depths of the pandemic.
Rising inflation expectations and long-term borrowing costs are raising concerns that a prolonged rally in equity markets is threatened. Investors are trying to gauge central banks’ appetite to buy more longer-term bonds to keep financial conditions loose. The focus is on Federal Reserve Chairman Jerome Powell’s upcoming comments after Chicago Fed Chairman Charles Evans said the recent rise in yields reflected economic optimism.
“Inflation is a concern; there is a lot of money lying around in the system and it makes sense to have some sort of correction right now, ”said Shana Sissel, chief investment officer of Spotlight Asset Group. “And the rise in bond yields has been the implicit means of tightening the market since the Fed made it clear it had no intention of doing so.”
Read: Inflation expectations in the United States hit a decade high as yields rebound
Democratic Senate leaders are working to consolidate support for the $ 1.9 trillion stimulus bill, which is expected to spur growth. The US economy grew modestly in the first two months of the year and vaccinations are contributing to business optimism, according to the Federal Reserve’s Beige Book.
Elsewhere, oil traded close to $ 62 a barrel, with traders focusing on a critical OPEC + meeting that could see supply brakes eased, while following events in the Middle East after the Houthi rebels said they hit a Saudi Aramco site with a missile.
Some key events to watch this week:
OPEC + production meeting on Thursday. US factory orders, first jobless claims and durable goods orders are due Thursday. February’s US employment report on Friday will provide an update on the speed and direction of the country’s labor market. recovery.
Here are some of the movements in the markets:
Stocks
Futures on S&P 500 fell 0.2% at 7.16 a.m. in London. The S&P 500 fell 1.3%. The Nasdaq 100 index lost 2.9%. Japan’s Topix index fell 1%. The Australian S & P / ASX 200 index fell 0.8%. South Korea’s Kospi index slipped 1.3%. Hong Kong’s Hang Seng Index lost 1.9%. The CSI 300 index lost 3.2%. Euro Stoxx 50 futures fell 0.7%.
Currencies
The yen traded at 107.16 per dollar, down 0.1%. The offshore yuan was at 6.4742 to the dollar. The Bloomberg Dollar Spot Index was little changed. The euro traded at $ 1.2057.
Obligations
The yield on 10-year Treasuries fell about two basis points to 1.46%. The yield on Australian 10-year bonds rose 10 basis points to 1.77%.
Basic products
West Texas Intermediate crude added 0.8% to $ 61.76 per barrel, while gold rose 0.5% to around $ 1,720 per ounce.
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