U.S. stock futures fall on high-yield moodiness: Markets retreat

(Bloomberg) — U.S. stock futures extended their decline as Treasury yields near their highest levels this year stoked concerns about tight monetary policy.

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U.S. stock contracts fell 0.4%, pointing to a second day of decline on Wall Street, while Europe’s Stoxx 600 edged higher amid gains at pharmaceutical maker Novo Nordisk A/S and the market online automobile Auto Trader Group Plc. The 10-year Treasury yield hovered around 4.60% after jumping 15 basis points over the past two days.

Global stocks are heading for their worst week since mid-April, as expectations for a U.S. rate cut have waned and inflation remains high. Another weak U.S. auction result on Wednesday increased concerns that U.S. deficit financing could push up yields.

This week’s data could prove crucial as investors refine their outlook for monetary policy: the United States will release gross domestic product figures later on Thursday, and inflation reports from the United States and Europe are expected on Friday.

“The market has fallen for the genius of the bond market and higher yields,” said Tony Sycamore, market analyst at IG Australia Pty Ltd. inflation data tomorrow.

As optimism over US rate cuts fades, BlackRock International Ltd. is becoming “more focused” in its view of bond duration, 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 the EMEA region. .

“We view this as the area where you still get the best bang for your buck in terms of revenue for stability,” he said in an interview with Bloomberg Television.

While the recovery in technology companies is supported by fundamentals and remains one of the asset management giant’s “key sector overweights”, Chedid says capital flows into European and Japanese stocks are growing.

The prospect of a rate cut from the European Central Bank at its June meeting is helpful, as is “a low point in macroeconomic data in Europe, which investors like,” Chedid said. “Profits have seen significant improvement in Europe over the past 12 months.”

Rand Slides

Elsewhere, the rand extended its losses and bank stocks fell as vote counting for South Africa’s elections accelerated. The ruling party seems far from obtaining a parliamentary majority for the first time since coming to power.

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In the commodities sector, crude traded flat as traders looked to U.S. inventory data and this weekend’s OPEC+ meeting for clarity on the outlook. supply and demand.

Company strengths:

• Analysts at Goldman Sachs began covering six large-cap pharmaceutical stocks on Thursday, saying “innovation is the key to success.” They have assigned buy ratings to AstraZeneca Plc, Novo Nordisk A/S and Novartis AG, and are neutral on GSK Plc and Bayer AG. Roche Holding AG is their only Sell rating.

• China is set 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, sources say close to the file.

• Golden Goose is launching a primary offering of 100 million euros ($108 million) in an IPO in Milan as the Italian luxury sneaker brand aims to strengthen its capital structure and reduce debt.

• Saudi Arabia is set to officially launch a secondary offering of shares in oil giant Aramco on Sunday, a deal that could raise more than $10 billion and rank 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 valuing the French renewable energy developer at around €6.1 billion.

Key events this week:

• Eurozone economic confidence, unemployment, consumer confidence, Thursday

• Initial jobless claims in the United States, GDP, Thursday

• Fed’s John Williams and Lorie Logan speak Thursday

• Japan unemployment, Tokyo CPI, industrial production, retail sales, Friday

• China’s official manufacturing and non-manufacturing PMI, Friday

• Eurozone CPI, Friday

• US consumer income, spending, PCE deflator, Friday

• Fed’s Raphael Bostic to speak Friday

Some of the main market movements:

Actions

• The Stoxx Europe 600 rose 0.3% at 10 a.m. London time

• S&P 500 futures fell 0.4%

• Nasdaq 100 futures fell 0.4%

• Dow Jones Industrial Average futures fell 0.8%

• The MSCI Asia-Pacific index fell 1%

• The MSCI Emerging Markets Index fell 1.3%

Currencies

• Bloomberg Dollar Spot Index little changed

• The euro rose 0.1% to $1.0815

• The Japanese yen rose 0.5% to 156.92 per dollar

• The offshore yuan rose 0.3% to 7.2532 per dollar.

• Sterling was little changed at $1.2713.

Cryptocurrencies

• Bitcoin rose 0.4% to $67,681.3

• Ether fell 0.4% to $3,735.16

Obligations

• The 10-year Treasury yield fell two basis points to 4.59%

• The German 10-year yield fell two basis points to 2.67%

• The UK 10-year yield fell three basis points to 4.37%

Raw materials

• Brent crude changed little

• Spot gold fell 0.1% to $2,335.55 an ounce

This story was produced with the help of Bloomberg Automation.

–With help from Masaki Kondo and Chiranjivi Chakraborty.

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