US futures fell on Monday and a sell-off in US government bonds extended into the sixth week after progress towards a new fiscal stimulus account brightened the economic outlook and weakened demand for technology stocks.
Futures linked to the S&P 500 fell 0.6%, indicating that the broad market may decline after the opening clock. The benchmark ended Friday at 0.8% for the week, following a volatile week in which investors traded large tech stocks. Nasdaq 100 futures fell 1.6% at the start of the new week, indicating that technology stocks are increasing losses.
In the bond market, the yield is on the standard 10-year US. Treasurys has risen to 1,610% as investors withdraw funds from assets considered the safest in the world. Yields rise when mortgage prices fall. It ended at 1,551% on Friday, the highest since February 2020.
President Biden’s $ 1.9 billion Covid-19 assistance plan was approved by the Senate over the weekend and will be voted in the House on Tuesday. The additional fiscal spending is expected to boost the pace of economic recovery and increase inflation. As the outlook brightens, money managers are moving away from government bonds and technology stocks, and to sectors such as banks and energy that are likely to recover in the economy.
“Stimulus control of people’s bank accounts will be a big growth as the consumer in the US makes up such a large part of US growth,” said Shaniel Ramjee, a multi-asset fund manager at Pictet Asset Management . “The underlying strength of the U.S. economy, growing expectations that the stimulus will succeed in full, plus inflation expectations rising due to oil: it is likely to continue to increase the yield of the bonds.”
Technical stocks have retreated over the past few weeks as vaccination programs progress and economic data suggest the recovery is underway. The Nasdaq Composite Index fell more than 2% last week, losing ground for a third consecutive week. This is because investors are betting that the biggest media, communications and online shopping companies will see a slower growth time as the pandemic locks end.
Traders worked on the floor of the New York Stock Exchange on Friday.
Photo:
Nicole Pereira / Associated Press
“The most important market element is what is happening in the yield market: the US technological side is suffering from the current normalization of the cost of capital,” said Samy Chaar, chief economist at Lombard Odier. “The market is currently acknowledging that we are recovering. Currents balance again to better reflect this cyclical recovery. ”
Overseas, the pan-continental Stoxx Europe 600 rose 0.6%, led by bank shares. Analysts have said that the European stock market benefits from investors fluctuating in value stocks.
European government bond yields also remain higher, with Germany’s average 10-year yield rising to minus 0.284%, from minus 0.295% on Friday. Investors are waiting for a meeting of the European Central Bank later this week to indicate whether he will act to temper the financing conditions.
In Asia, most important benchmarks declined with the end of trading. The Shanghai composite fell 2.3% and Hong Kong’s Hang Seng index fell 1.9% as investors wrestled with signs that Chinese policymakers would take more action to contain debt and prevent bubbles from forming.
Bitcoin traded around $ 50,600 on Monday, which according to data from CoinDesk has risen nearly 4% since Friday night.
Write to Anna Hirtenstein by [email protected]
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