US stock futures faltered, bond yields rose and oil rose to its highest level in nearly three years, as investors bet on a further economic reopening but remain concerned about supply-chain disruptions.
Futures linked to the S&P 500 were down 0.4%, suggesting that the broad-market index is poised to end its three-day rise. Dow Jones Industrial Average futures were relatively flat, while futures on the tech-heavy Nasdaq-100 fell 0.9%.
According to analysts at ANZ Research, oil prices rose due to lack of supply across the globe and a rise in natural gas prices also pushed crude. Global benchmark Brent crude is trading 1.9% higher at $78.70 per barrel, the highest level since October 2018.
Shares rose in the markets last week on fears about Evergrande’s debt problem. Despite the Chinese property developer missing a bond coupon payment, the S&P 500 still ended the week up 0.5%. Federal Reserve Chairman Jerome Powell helped boost confidence when he said the US economy had recovered enough for the central bank to announce a possible start of bond-buying tapering at its next meeting.
According to Shaniel Ramji, a multiasset fund manager at Piket Asset Management, the near-term prospect of a stimulus withdrawal by central banks is pushing up bond yields and weighing on stocks.
“It’s another rotation driven by the bond market. When growth [stocks] Underperform, it accounts for the largest portion of the index’s market cap, so it “weighs on the broader market,” he said. Technology stocks are particularly sensitive to rising interest rates.
The yield on the 10-year benchmark US Treasury note rose to 1.494% on Monday from 1.459% on Friday, hitting its highest intraday level since June. It rose for the fifth day, marking the biggest weekly increase since March. European sovereign bond yields also climbed, with the German 10-year bond yield reaching minus 0.201%, the highest since July.
Major benchmarks in Asia were mixed on Monday. The Shanghai Composite Index slipped 0.8%, while Hong Kong’s Hang Seng Index lost 0.1%. Shares of Evergrande climbed 8% but were down more than 80% for the year. China Evergrande New Energy Vehicle Group, a subsidiary of Evergrande parent company, scrapped plans to list on the Shanghai Stock Exchange.
Hong Kong-listed shares of Sanac China, another major property developer, fell more than 9% and closed at their lowest level in more than four years. Investors became concerned that the company might run into the same problems as Evergrande, after a document circulated showing a fad entity seeking government help to ease its liquidity difficulties.
Germany’s benchmark stock index DAX rose 0.3%. The Germans voted for a new chancellor over the weekend. According to Peter Shafrick, a global macro strategist at RBC Capital Markets, early results showed a tight race, which would mean lengthy coalition talks and no major policy changes.
“For markets, this means continuity. At the end of the day, this will remain a centrist government in all respects,” Mr. Shafrick said. “Germany’s fiscal stance will remain within limits that are readily acceptable to the market.”
Pan-continental Stokes Europe 600 retreated 0.2%, with stocks that benefited from the easing of pandemic restrictions. Office-homeowner and WeWork competitor IWG grew nearly 7%. Travel stocks were up. International Consolidated Airlines Group climbed 5% and Aeroportes de Paris 6%.
Rolls-Royce jumped nearly 9%, heading for a second trading session after the jet-engine maker won a deal to supply a US Air Force fleet of B-52 bombers. Cinema chain Cineworld posted a new James Bond film as a 10% advanced booking increase.
In US premarket trading, special-purpose acquisition company Gores Guggenheim rose 5% after it agreed to merge with Swedish electric-vehicle maker Polestar in a $21 billion deal.
The latest data showed a 1.8% increase in new US orders for durable goods in August, stronger than economists expected, as business investment and consumer spending increased.
Bitcoin climbed 1% compared to its level at 5 p.m. Friday, recovering some ground after a steep fall after the Chinese government outlawed cryptocurrency transactions. The digital currency is traded around $43,500.
Shares of Hong Kong-listed Huobi Technology Holding, a unit of Huobi Global that operates a cryptocurrency platform, fell more than 21% on Monday.
This story has been published without modification to the text from a wire agency feed
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