US stock futures fell on Monday and a US government bond sale extended into its sixth week, after progress towards a new fiscal stimulus project illuminated the economic outlook and undermined demand for US equities. technology.
Futures linked to the S&P 500 fell 0.6%, suggesting that the broad market may fall after the opening bell. The benchmark ended Friday with a 0.8% hike in the week, after a volatile week in which investors stopped buying big tech stocks. Nasdaq-100 futures fell 1.6% at the start of the new week, indicating that technology stocks have extended losses.
In the bond market, the benchmark yield in the USA is 10 years. Treasury bills rose to 1.610% as investors withdrew funds from assets considered to be the safest in the world. Yields increase when bond prices fall. It had ended Friday at 1.551%, the highest figure since February 2020.
President Biden’s $ 1.9 trillion Covid-19 relief plan passed the Senate over the weekend and faces a vote in the House as early as Tuesday. Additional fiscal spending is expected to boost the pace of economic recovery and boost inflation. As the outlook improves, money managers are putting aside government bonds and technology stocks and moving into sectors like banks and energy, which are likely to recover with the economy.
“Stimulus checks in people’s bank accounts will be a major driver of growth, as the consumer in the United States represents a large part of the growth in the United States,” said Shaniel Ramjee, manager of multiple pool funds at Pictet Asset Management. “The underlying strength of the US economy, the growing expectations that the stimulus will be fully approved, plus the expectations of inflation rising because of oil: all of this will likely continue to raise bond yields.”
Technology stocks have declined in recent weeks, as vaccination programs advance and economic data indicates that the recovery is underway. The Nasdaq Composite Index fell more than 2% last week, losing ground for the third consecutive week. That’s because investors are betting that the biggest media, communications and online shopping companies will grow more slowly as pandemic blocks end.
Traders worked on the New York Stock Exchange on Friday.
Photograph:
Nicole Pereira / Associated Press
“The main element of the market is what is happening in the income market: the technological side of the United States is suffering from the current normalization of the cost of capital,” said Samy Chaar, chief economist at Lombard Odier. “The market is recognizing that we are recovering. The flows are rebalancing to better reflect this cyclical recovery. “
Abroad, the pan-continental Stoxx Europe 600 rose 0.6%, led by bank shares. Europe’s stock market is benefiting from investor rotation for value stocks, analysts said.
European government bond yields also continue to rise, with Germany’s 10-year benchmark yield rising to minus 0.284%, from minus 0.295% on Friday. Investors are awaiting a meeting of the European Central Bank later this week to see if it will act to moderate financing conditions.
In Asia, most of the main benchmarks fell at the close of trading. The Shanghai Composite fell 2.3% and the Hong Kong Hang Seng index fell 1.9%, with investors grappling with signs that Chinese lawmakers will take further steps to control debt and prevent asset bubbles from forming. .
Bitcoin traded at around $ 50,600 on Monday, an increase of almost 4% over Friday night, according to data from CoinDesk.
Write to Anna Hirtenstein at [email protected]
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