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European stocks rose on Monday as US tech equity futures collapsed, with bond yields nearing one-year highs as the world’s largest economy was poised to add 1, $ 9 trillion in stimulus.
The US Senate passed its version of the $ 1.9 trillion stimulus package this weekend, sending it back to the US House for approval before President Joe Biden could sign it. Soaring bond yields – with 10-year Treasury TMUBMUSD10Y,
up 64 basis points in 2021 through Friday – has led investors to shift from assets perceived to have stretched valuations, such as tech companies, to underprivileged sectors with less demanding valuations.
The Stoxx Europe 600 SXXP,
rose 0.6%, with businesses that struggled during the COVID-19 pandemic leading the way. Carnival CCL cruise operator,
oil services company TechnipFMC FTI,
tourism conglomerate TUI TUI,
and operator of the Klepierre LI shopping center,
at the top of the ranking.
Manufacturer of HelloFresh HFG food preparations,
and the hydrogen fuel company Nel NEL,
both up more than 100% over the past 52 weeks, have declined sharply.
Futures on the highly technological Nasdaq-100 NQ00,
fell 1.6%.
Florent Pochon, strategist at French bank Natixis, said there were plenty of reasons for markets to be nervous, but he expects tantrums to be limited as long as the Federal Reserve remains accommodating.
“In terms of valuation, the US 10-year seems to be approaching fair value, given all the uncertainty over what it is,” he said. “As massive as the US fiscal stimulus package may be, it should not generate high structural inflation, but rather worsen the country’s trade deficit.”
Actions in the Pearson PSON educational editor,
dropped to 5% before turning around and increasing by 5%. The company’s results and outlook were largely in line with expectations as it planned to sell its local international courseware publishing business and occupy fewer properties.
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