U.S. futures fell Friday along with European stocks as traders weighed bond-market gyrations sparked by concerns over inflation and monetary tightening.
The Stoxx Europe 600 Index fell, paring its fourth straight weekly advance, ahead of data on Eurozone economic growth and inflation that might cement traders’ conviction that interest-rate increases are on the horizon. Positive earnings from companies including Safran SA, Daimler AG and Holcim Ltd. cushioned the broad-based decline.
European bonds extended Thursday’s retreat after European Central Bank President Christine Lagarde offered only mild pushback against traders’ bets on a rate hike as soon as next year. The euro was steady after jumping 0.7% on Thursday, and remains on track for a third week of gains.
Contracts on the S&P 500 and Nasdaq 100 fell and Asian stocks were mixed after disappointing Amazon.com Inc. and Apple Inc. earnings. The two tech giants fell in extended trading, signaling a possible drop of more than $200 billion in combined market value when the U.S. reopens. That dented upbeat views on company performance that earlier took Wall Street to a record close.
The U.S. 10-year Treasury yield climbed. The curve between 20- and 30-years has inverted for the first time since the U.S. government reintroduced a two-decade maturity in 2020. Inflation pressures and the prospect of interest-rate hikes are whipsawing bond markets. The U.S. dollar ticked up from a one-month low and crude oil fluctuated. Markets are grappling with a number of crosscurrents. Generally positive corporate performance has helped to underpin global equities. But inflation risks from supply-chain snarls and costlier raw materials are boosting expectations for rate hikes and dimming the economic outlook.
“In the very near term, because many global central banks are just dipping their feet into taper, not even into quantitative tightening, the aggregate liquidity could remain very supportive,” Vishnu Varathan, head of economics and strategy at Mizuho Bank Ltd. in Singapore, said on Bloomberg Television. “Although I think you get very much more discriminatory moves and much more selective moves in the equity markets.”
The latest data showed U.S. growth slowed more than expected in the third quarter, hampered by supply chains and a surge in Covid-19 cases. A separate report showed that weekly jobless claims fell to a pandemic low.
Meanwhile, President Joe Biden called on lawmakers to push ahead with a revised $1.75 trillion tax and spending plan, which has been scaled back from a previous $3.5 trillion proposal. A $550 billion infrastructure bill is also pending.
In China, the debt crisis at China Evergrande Group remains in focus. Some holders of one of its bonds received an overdue interest payment, buying more time for the troubled property developer.
Coal futures extended a dramatic decline as China’s government said there’s further room for prices to fall, ratcheting up interventions in the market aimed at easing an energy crisis.
In cryptocurrencies, Bitcoin retreated below $58,000 during a sharp swoon in U.S. trading. The largest token rebounded to around $61,000. Ether, the second largest, rallied to a record high.
Here are some events to watch this week:
- G-20 joint finance and health ministers meeting ahead of the weekend leaders’ summit, Friday