Technology shares gains while futures on the digital-heavy Nasdaq 100 index climbs

By: |
September 29, 2021 6:40 PM

The moderation in yields provides a breather to investors concerned about valuations, as higher rates reduce the present value of equity cash flows.

Technology shares, Nasdaq 100, yields, valuations, global markets,A global equity rally stalled this week as investors reeled from surging energy costs at the same time central banks began laying down plans to withdraw some of the pandemic stimulus.

Bloomberg: Dip buyers returned to global markets, sending stocks higher and Treasury yields lower, as they bet Tuesday’s selloff had gone too far.

Technology shares, which had been at the center of the rout, paced gains in Europe, while futures on the digital-heavy Nasdaq 100 Index climbed 0.6%. The 10-year U.S. yield shed two basis points and the five-year rate fell below 1%. Discount chain Dollar Tree Inc. led premarket gains among S&P 500 Index companies after raising share-repurchase authorization. Oil slid after an increase in U.S. crude stockpiles.

The moderation in yields provides a breather to investors concerned about valuations, as higher rates reduce the present value of equity cash flows. However, the risks that sparked this week’s slump remain. The Federal Reserve has turned more hawkish, a political standoff over U.S. debt ceiling is going to the wire, and an energy crunch is sparking fears of high inflation and low growth.

“Many things are in flux: the pandemic is not over, the supply chain bottlenecks we are seeing are affecting all sorts of prices and we’ll need to see how it plays out because the results are not clear in terms of inflation,” Belita Ong, Dalton Investments chairman, said on Bloomberg Television.

Gains during European hours marked a turnaround from the Asian session, when equities extended losses amid concerns over stagflation and China Evergrande Group’s debt crisis. Sentiment improved as a steady flow of buyers emerged in the Treasury market, ranging from foreign and domestic funds to leveraged accounts.

A global equity rally stalled this week as investors reeled from surging energy costs at the same time central banks began laying down plans to withdraw some of the pandemic stimulus. U.S. consumer confidence dropped in September for a third straight month, suggesting concerns over the delta variant and higher prices continued to dampen sentiment.

Europe’s Stoxx 600 gauge rebounded from a two-month low. Semiconductor-equipment company ASM International posted the biggest increase on the index amid positive comments by analysts on its growth outlook.

Dollar Tree jumped 6.1% after increasing the share-repurchase authorization to $2.5 billion. Boeing Co. added 2.6% after Sanford C. Bernstein raised the stock to outperform on a resurgence in air travel.

Earlier, MSCI Inc.’s gauge of Asian stocks had the biggest drop in almost six weeks. The Chinese benchmark fell to the lowest level this month amid uncertainty around the Evergrande crisis and signs of a slowdown in the world’s second-biggest economy.

Investors were also watching a deadline to raise the U.S. debt ceiling. During a Senate hearing, Fed Chair Jerome Powell and Treasury Secretary Janet Yellen both warned that a U.S. default would have catastrophic consequences. Republicans blocked a Democratic move in the Senate to raise the limit.

Futures in Brent crude slid, while West Texas Intermediate pared losses. U.S. crude stockpiles expanded by more than 4 million barrels last week, according to the industry-funded American Petroleum Institute.

Elsewhere, the British pound fell to the lowest since January as expectations of higher rates were offset by surging energy prices.

Here are some events to watch this week:

  • Central bank chiefs Andrew Bailey (BOE), Haruhiko Kuroda (BOJ), Christine Lagarde (ECB) and Jerome Powell (Fed) participate in an ECB Forum panel, Wednesday
  • House Financial Services Committee hearing on the Fed, Treasury’s pandemic response, Thursday
  • China Caixin manufacturing PMI, non-manufacturing PMI, Thursday
  • Univ. of Michigan sentiment, ISM manufacturing, U.S. construction spending, spending/personal income, Friday

Some of the main moves in markets:

Stocks

Futures on the S&P 500 rose 0.5% as of 8:20 a.m. New York time
Futures on the Nasdaq 100 rose 0.6%
Futures on the Dow Jones Industrial Average rose 0.4%
The Stoxx Europe 600 rose 0.9%
The MSCI World index fell 0.1%

Currencies

The Bloomberg Dollar Spot Index rose 0.1%
The euro fell 0.2% to $1.1655
The British pound fell 0.4% to $1.3484
The Japanese yen was unchanged at 111.50 per dollar

Bonds

The yield on 10-year Treasuries declined two basis points to 1.52%
Germany’s 10-year yield declined one basis point to -0.21%
Britain’s 10-year yield declined one basis point to 0.98%

Commodities

West Texas Intermediate crude fell 0.3% to $75.08 a barrel
Gold futures rose 0.1% to $1,739.90 an ounce

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