Stocks fell with US futures and Treasuries extended a selloff as wagers for more hawkish monetary policy mounted. Oil rose after Russia said it will cut output.
(Bloomberg) — Stocks fell with US futures and Treasuries extended a selloff as wagers for more hawkish monetary policy mounted. Oil rose after Russia said it will cut output.
Contracts on U.S. stock gauges fell, with Tesla Inc. and most Big Tech names in the red in premarket trading. Lyft Inc. tumbled after its outlook disappointed analysts. European equities headed for their worst weekly drop in nearly two months, while the region’s bonds also retreated.
US Treasuries extended losses after investors pushed yields on the two-year Treasury above the 10-year’s by the most since the early 1980s, a sign of flagging confidence in the economy’s ability to withstand additional Federal Reserve hikes.
Investors jittery about a hawkish policy tilt are paying close attention to official comments and economic data for clues. In Japan, the yen jumped on reports of a surprise Bank of Japan governor nomination for Kazuo Ueda after an apparent refusal from dovish favorite Masayoshi Amamiya. The currency pared gains later as Ueda said the BOJ’s stimulus should stay in place.
German two-year yields jumped to the highest since 2008 as traders cranked up bets of European Central Bank tightening. Gilt yields climbed after data showed the UK narrowly avoided a recession last year. Over in Russia, policymakers signaled they will consider rate hikes at coming meetings should risks to inflation worse.
Read: Fed-Funds Call at 8% Keeps One Strategist Ahead of the 6% Pack
Stocks are heading for their first weekly decline in three after a chorus of Fed speakers reinforced the need to keep raising rates for longer, following a strong payrolls report, quashing the optimism that spurred a powerful rally in January.
Next week’s inflation update from the US offers a relevant potential inflection point in the Treasury yield curve, according to Benjamin Jeffery and Ian Lyngen, strategists at BMO Capital Markets Corp.
“Our expectations are that the market takes away sufficient angst regarding the prevailing inflation trend to press the inversion trade even further,” they wrote in a note.
Elsewhere, oil jumped after Russia said it plans to cut March production by 500,000 barrels a day.
Among notable movers:
- News Corp. fell after earnings missed estimates.
- Paypal Holdings Inc. gained on better-than-forecast guidance.
- Adidas AG slumped in Germany as it warned of losses after ending ties with rapper Ye.
Key events:
- US University of Michigan consumer sentiment, Friday
- Fed’s Christopher Waller and Patrick Harker speak, Friday
Here are some of the main market moves:
Stocks
- S&P 500 futures fell 0.5% as of 8:28 a.m. New York time
- Nasdaq 100 futures fell 0.7%
- Futures on the Dow Jones Industrial Average fell 0.3%
- The Stoxx Europe 600 fell 1.2%
- The MSCI World index fell 0.4%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro fell 0.4% to $1.0695
- The British pound was little changed at $1.2110
- The Japanese yen rose 0.7% to 130.67 per dollar
Cryptocurrencies
- Bitcoin fell 0.2% to $21,813.37
- Ether was little changed at $1,540.45
Bonds
- The yield on 10-year Treasuries advanced three basis points to 3.69%
- Germany’s 10-year yield advanced four basis points to 2.35%
- Britain’s 10-year yield advanced five basis points to 3.34%
Commodities
- West Texas Intermediate crude rose 0.7% to $78.62 a barrel
- Gold futures fell 0.2% to $1,874.80 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Richard Henderson, Tassia Sipahutar, James Hirai and Robert Brand.
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