European equities rose on Monday, while U.S. tech stock futures plunged, with bond yields close to a year high, as the world’s largest economy was about to add $ 1.9 trillion in stimuli.
The US Senate over the weekend approved its version of the $ 1.9 trillion stimulus package, sending it back to the U.S. House for approval before President Joe Biden can sanction it. The increase in bond yields – with the 10-year Treasury TMUBMUSD10Y,
up to 64 basis points in 2021, until Friday – led investors to switch from assets perceived as having stretched valuations, such as companies in the technology sector, to disadvantaged sectors with less demanding valuations.
The Stoxx Europe 600 SXXP,
rose 0.6%, with companies struggling during the COVID-19 pandemic leading the way. Cruise operator Carnival CCL,
oil services company TechnipFMC FTI,
tourism conglomerate TUI TUI,
and the shopping center operator Klepierre LI,
led the leader board.
HelloFresh HFG, manufacturer of prepared food kits,
and the hydrogen fuel company Nel NEL,
both increased by more than 100% in the past 52 weeks and decreased dramatically.
Futures on the high-tech Nasdaq-100 NQ00,
fell 1.6%.
Florent Pochon, strategist at French bank Natixis, said there are many reasons for markets to be nervous, but he expects any stock rage to be limited as long as the Federal Reserve remains tolerant.
“In terms of valuation, the US 10 years seems to be approaching fair value, keeping in mind all the uncertainty that determines exactly what it is,” he said. “As massive as the US fiscal stimulus plan may be, it is not expected to generate high structural inflation, but rather to deepen the country’s trade deficit.”
Shares in educational publisher Pearson PSON,
it dropped up to 5% before turning and rising 5%. The company’s results and prospects were in line with expectations, as it set out plans to sell its local international course publishing business and occupy fewer properties.