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

(Bloomberg) — U.S. stocks are poised to extend their decline as Treasury yields near this year’s highest level sparked concerns about restrictive monetary policy.

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S&P 500 futures fell 0.5%, signaling a second day of declines. Salesforce Inc. declined. down 17% in pre-market trading due to slower sales growth. The European Stoxx 600 index topped the rise thanks to telecommunications and banking stocks. Ten-year Treasury bond yields stabilized after jumping by about 15 basis points 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 tepid result of the US auction on Wednesday heightened concerns that financing the US deficit will lead to higher yields at a time when the Federal Reserve is in no hurry to ease policy.

The remaining data this week could be key as investors improve their outlook for monetary policy: US releases GDP numbers later Thursday, which will likely be lower than initial reading, Fed officials including Fed Chair In New York John Williams and Atlanta Federal Reserve Bank President Rafael. Bostic is scheduled to speak. Inflation reports from the US and Europe will be released on Friday.

As optimism about U.S. interest rate cuts fades, BlackRock International Ltd. is sticking to the front end and belly of the U.S. Treasury curve, according to Karim Chedid, the firm’s head of investment strategy for Europe, the Middle East 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.

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While the sharp rise in technology companies is supported by fundamentals and remains one of BlackRock’s “key overweight sectors,” Shadid says he is seeing increased 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 seems that the ruling party will not be able to obtain a parliamentary majority for the first time since it came to power.

South Africa’s African National Congress could lose its national majority, models show

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

The most prominent features of the company:

  • Goldman Sachs analysts initiated coverage of six large pharmaceutical stocks on Thursday. 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.

  • Luxury sneaker brand Golden Goose Group SpA has initiated an initial public offering in Milan that is expected to be the largest listing in Italy in more than a year.

  • 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.

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Main events this week:

  • 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

  • S&P 500 futures were down 0.4% as of 6:40 a.m. New York time.

  • Nasdaq 100 futures fell 0.3%

  • Dow Jones Industrial Average futures fell 0.9%

  • The Stoxx Europe 600 index rose 0.3%.

  • The MSCI World Index was little changed

Currencies

  • The Bloomberg Dollar Spot Index was little changed

  • The euro rose 0.2 percent to $1.0818

  • The British pound rose 0.2 percent to $1.2721

  • The Japanese yen rose 0.5 percent to 156.93 yen to the dollar

Digital currencies

  • Bitcoin rose 0.6% to $67,800.1

  • Ethereum fell 0.5% to $3,729.32

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

  • West Texas Intermediate crude fell 0.4 percent to $78.91 a barrel

  • Gold in spot transactions fell 0.2 percent to $2,334.32 per ounce

This story was produced with assistance from Bloomberg Automation.

-With assistance from Masaki Kondo and Chiranjeevi Chakraborty.

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