Tech stocks prepare to slide as bond yields soar

Stock futures slipped, with technology stocks heading to lead losses, as the Covid-19 shutdown in China added to the uncertainty that investors face in a period of high interest rates.

Technology-focused Nasdaq 100 futures fell 0.7% Monday, after the Nasdaq Composite fell 3.9% last week, when Federal Reserve officials signaled their intention to raise borrowing costs and shrink the central bank’s balance sheet to quell inflation.

S&P 500 futures fell 0.3% on Monday and the Dow Jones Industrial Average futures fell 0.2%.

US government bonds extended their sale. The yield on the 10-year Treasury rose to 2.757%, the highest level since early 2019, up from 2.713% on Friday. Yields, which are moving in the opposite direction to bond prices, have risen in four of the past five weeks.

Twitter shares fell 1.9 percent in pre-market trading after the company’s CEO said Elon Musk had decided not to join the board. Tesla, where Musk is CEO, fell 3.6 percent.

AT&T, which on Friday completed the planned separation of its film and television empire into a publicly traded company, rose 1.8% before the sale.

Stock markets mostly fell offshore. The Stoxx Europe 600 lost 0.2%, led by technology and auto companies.

France’s CAC 40 was mixed, rising 0.9% after President Emmanuel Macron received 28.2% of the estimated vote in the first round of the presidential election, ahead of far-right leader Marine Le Pen by 22.9%. The two will face off in a rematch on April 24 of the 2017 election.

Le Pen has tempered her criticism of the eurozone, but her lead in the opinion polls continues to cause concern in European markets in recent weeks. The euro rose 0.2 percent on Monday to $1.0926. The yield on French 10-year government bonds rose to 1.280% from 1.257% Friday.

Société Générale shares rose 6.5% after the French bank said it was selling its entire stake in Rosbank and Russian insurance units to Interros, a conglomerate controlled by billionaire mineralogist Vladimir Potanin.

Stocks in China fell as economic losses from the Covid-19 lockdowns in Shanghai continued to mount, and supply chain disruptions continued in the country. The CSI 300, which tracks the largest companies listed in Shanghai and Shenzhen, is down 3.1%, while Hong Kong’s Hang Seng is down 3%.

“The resurgence of the epidemic is the main reason,” said Bruce Pang, head of macro strategy research for China Renaissance Securities, adding that investors hope for action from Beijing to help counter the effects of the slowdown.

Chinese auto sales data on Monday showed passenger car sales fell 10.5% in March, after production was hampered by factory closures. Shanghai, the epicenter of the Covid-19 outbreak, has reported more than 25,000 asymptomatic carriers of the coronavirus, according to the National Health Commission.

Hong Kong-listed NIO shares fell 11%. The electric car maker said it was forced to suspend production after some of its suppliers’ operations were disrupted. Shares of Zhejiang Geely Holding, a major Chinese automaker that owns Sweden’s Volvo Cars, fell 7.2%, while shares of Shenzhen-listed electric car maker BYD lost 4.5%.

Political uncertainty in Europe and economic risks from Chinese shutdowns have further jittered investors after a bumpy start for equities by 2022. Bond yields soared with the prospect of monetary policy tightening by the Federal Reserve. The war in Ukraine, which is entering a new phase in the east of the country, has boosted commodity prices, adding to inflationary pressures.

Investors will analyze results from some of the largest financial institutions when the first-quarter earnings season begins this week. JPMorgan Chase, BlackRock and Delta Air Lines are due to report on Wednesday, followed by Goldman Sachs, Morgan Stanley and Citigroup Thursday.

In commodities, Brent and Brent crude futures fell 2.4% to $100.35 a barrel, extending declines prompted by shutdowns in Shanghai and plans to release strategic reserves in the United States and elsewhere.

This story was published from the news agency feed without modifications to the text

participation in Mint newsletters

* Enter an available email

* Thank you for subscribing to our newsletter.

Download the app to get 14 days of unlimited access to Mint Premium absolutely FREE!

Leave a Comment