US futures fell on Monday, and the sale of US government bonds expanded in the sixth week, after progress towards a new fiscal stimulus bill brightened the economic outlook and lowered demand for technology stocks.
S&P 500 futures fell 0.6%, suggesting the broader market could fall after the opening bell. The benchmark ended Friday at 0.8% for the week, after a volatile week in which investors turned in large stocks of technology. Nasdaq-100 futures fell 1.6% at the beginning of the new week, indicating technology stocks expanding losses.
On the bond market, the US benchmark yield of 10 years. Treasuries rose 1.610% as investors moved funds from assets considered to be the safest in the world. Yields rise when bond prices fall. It closed at 1.551% on Friday, the highest since February 2020.
President Biden’s $ 1.9 trillion Covid-19 bailout plan was approved in the Senate over the weekend and faces a vote in the chamber on Tuesday. Additional fiscal spending is expected to increase the pace of economic recovery and increase inflation. As the outlook brightens, money managers are moving away from government bonds and technological action and moving into sectors such as banking and energy that are likely to return to the economy.
“Stimulus checks on people’s bank accounts will be a big growth driver, given that the US consumer is such a big part of US growth,” said Shaniel Ramjee, multi-set fund manager at Pictet Asset Management. “The power behind the US economy, growing expectations for the stimulus to be fully exceeded, plus rising inflation expectations due to oil: all this will continue to increase yields on higher bonds.”
Technical stocks have retreated in recent weeks as vaccination programs advance and economic data indicate that recovery is under way. The Nasdaq Composite Index fell more than 2% last week, losing ground for the third week in a row. This is because investors are betting that the largest media, communications and online shopping companies will see a slower pace of growth as pandemic blockages end.
Traders worked at the New York Stock Exchange on Friday.
Photo:
Nicole Pereira / Associated Press
“The main element of the market is what is happening in the yield market: the US technology side is suffering from the current normalization of the cost of capital,” said Samy Chaar, chief economist at Lombard Odier. “The market is currently recognizing that we are recovering. Flows rebalance to better reflect this cyclical recovery. ”
Abroad, the pan-continental Stoxx Europe 600 rose 0.6%, driven by bank shares. The European stock market benefits from investors who turn into value stocks, analysts said.
Yields on European government bonds also continue to rise, with Germany’s 10-year benchmark yield rising to minus 0.284% from minus 0.295% on Friday. Investors are expecting a meeting of the European Central Bank later this week to indicate whether it will act to ease funding conditions.
In Asia, most major benchmarks declined by the end of trading. Shanghai Composite fell 2.3% and Hong Kong’s Hang Seng Index fell 1.9% as investors saw signs that Chinese policymakers will take more action to control debt and prevent the formation of asset bubbles.
Bitcoin traded around $ 50,600 on Monday, up nearly 4% from Friday night, according to CoinDesk.
Write to Anna Hirtenstein at [email protected]
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