European Bond Rout Intensifies, U.S Futures Waver: Markets Wrap

U.S index futures plunged, and equities in Europe wiped out their gains as stockholders took stock of the outlook for monetary policy ahead of soaring inflation data later this week. However, treasuries were stable, though a rout in European sovereign bonds intensified.

Nasdaq 100 and S&P 500 contracts fluctuated following Friday’s bounce on Wall Street. After announcements and reports, Peloton Interactive Inc. soared in the premarket trading considering takeover options. The Stoxx Europe 600 index oscillated between little profits and losses after its most extended period of weekly declines in almost a year. 

Greek debt resulted in a sell-off in Europe after hawkish comments from a European Central Policymaker on the potential for a first rise in rate this year. The 10-year Treasury brimmed higher, and there was a significant change in the dollar. The euro snapped a six-day strengthening run. 

More market volatility is expected from the U.S inflation report this week. A reading north of 7%, the high up since the 1980s, is predicted. 

Credit Agricole strategists, including Valentin Marinov, said in a note, “The repricing of Fed rate hikes has lost momentum as investors await more clarity on the impact of the pandemic and soaring energy prices on the U.S. and Fed outlook. “Looking ahead, the focus will be on the U.S. CPI & the January Fed minutes. it would take fairly positive inflation surprises & hawkish FOMC signals to revive the dollar rally in the near term.”

A Chinese equity benchmark rose about 2% after resuming from a holiday, catching up to last week’s gains in the global equities. On the other hand, a Hong Kong technology gauge withdrew, sapped by Alibaba Group Holding Ltd. to believe that SoftBank Group Corp may sell its share in the firm. 

Klaas Knot, European Central Bank Governing Council Member, said he anticipates a rise in rates as early as the fourth quarter. Last week, EB made a hawkish pivot, with President Christine Lagarde no longer excluding a rate hike this year, stressing the European sovereign debt. 

Elsewhere, Chris Weston, Research head with Pepperstone Financial Pty Ltd., wrote, “The momentum trade has been too short bonds, and many are now fearing higher bond yields will start to bite in equity land,” 

In the meantime, Bitcoin mounted above USD 42,000, the highest from the two weeks. 

About Ukraine, Joe Biden and his French counterpart, Emmanuel Macron, discussed retaliating to Russia’s increased military strength on the Ukrainian border. However, Moscow has refused that it plans to attack. 

In the latest Coronavirus, Hong Kong will report another record number of infections. From Feb 21, Australia would allow double-vaccinated visa holders to enter the border, ending the two years of international border controls. On the other hand, China announced a national lockdown.