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* Europe's STOXX 600 down 1%
* Tech stocks on course for worst session since May
* Euro zone yields jump higher
* Oil and gas index on February 2020 high
* Nasdaq futures fall
*
Sept 28 - Welcome to the home for real-time coverage of
markets brought to you by Reuters reporters. You can share your
thoughts with us at markets.research@thomsonreuters.com
AFTER A SURGE AT THE OPEN, VOLATILITY COOLS DOWN (0902 GMT)
Market action was intense at the open with oil and gas
stocks shooting up and tech falling down simultaneously.
Oil prices and yields spiking up, the safe-haven dollar
sucking in gains: the session looked to be on course for a very
complicated Tuesday.
Europe's volatility gauge also shot up 2 points to
24, exposing the market stress.
Now, even if the broader STOXX 600 is still 1.1% down but
volatility has fizzled back down substantially, a sign perhaps
that things a could be settling down a tad.
Or maybe this is just a temporary respite before Wall Street
opens and big tech stocks face once again the threat of rising
yields.
(Julien Ponthus)
*****
TECH SELLOFF DRAGS EUROPEAN STOCKS LOWER (0751 GMT)
European equities are lower, with tech stocks under strong
selling pressure, while shares in oil and gas companies are well
in the black.
The energy sector continues to benefit from oil prices
rising for the sixth day in a row on fears over tight supply.
Tech stocks are struggling after the Nasdaq underperformed
the S&P 500 index yesterday as yields are moving higher and
inflationary pressures growing stronger.
The European Stoxx 600 is down 1%, with the tech
index falling 2.7% and on course for its worst session
since April. Oil and gas stocks rise 0.8% hitting a new
high since February 26.
Worries about the global economy hit risk sentiment after
Goldman Sachs cut China's economic growth forecast for 2021, as
energy shortages and deep industrial output cuts add
"significant downside pressures."
Stocks in Petershill are up 0.6% on London debut,
while Smiths Group shares are the best Stoxx 600
performers, up 3.3% after full-year results.
(Stefano Rebaudo)
*****
TIME TO EXPECT INFLATION (0718 GMT)
It's only Tuesday but ten-year Treasury yields are already
up 8 basis points this week, leading a global move up in
government borrowing costs after last week's hawkish central
bank chorus.
Even more interesting is the move in inflation breakevens,
which reflect bond market expectations of future price growth.
Ten-year U.S. breakevens rose almost 5 bps yesterday and are up
10 bps in the past week. Those moves too are being seen across
much of the developed world, including Germany and Britain
.
It's probably not all that surprising, given the spreading
energy shortages and gas price spikes that have rapidly fed into
crude oil markets, taking Brent above $80 a barrel.
Fears are growing of the associated seep-through into other
parts of the economy; Chinese power shortages have already
halted production at a number of factories and may further dent
global supply chains.
Investors say the yield rises are yet insufficient to derail
the TINA narrative that has kept the stocks rally going.
European markets do look set for a stronger session though Wall
Street futures are down, especially those for Nasdaq whose
tech-heavy stocks take a bigger hit when yields are on the rise.
We get to hear the views of several policy heavyweights
later on Tuesday, from Fed Chair Powell to the Bank of England's
Andrew Bailey to the ECB's Christine Lagarde.
China's PBOC meanwhile has managed to calm the waters with a
pledge to support homeowners. That lifted Hong Kong and
mainland-listed shares, including property firms that have been
hit hard by the problems at Evergrande which looks set for a
debt default.
But... could the United States be headed for default too?
With three days left before U.S. government funding expires
and a month or less before the Treasury runs out of borrowing
room, the Senate failed on Monday to approve a measure to
suspend the debt ceiling. The wrangling continues.
Key developments that should provide more direction to
markets on Tuesday:
-Chinese industrial firms' profits slowed for a sixth
consecutive month
-Britain put the army on standby to deliver fuel
-ECB President Christine Lagarde speaks
-Fed Chair Jerome Powell addresses Senate Banking committee
-U.S. Treasury Secretary Janet Yellen speaks
-Emerging markets: Morocco, Kenya central bank meetings
-German consumer sentiment
-BOE consumer credit
-U.S. business and consumer inventories
-Auction: 7-year Treasury auction
(Sujata Rao)
*****
EUROPEAN FUTURES MIXED, CAUTION OVER CHINA (0619 GMT)
European stock futures are mixed after yesterday's dip as
worries over China coupled with rising interest rates are
keeping risk sentiment in check.
Some investors argue that bond yields increase will not hurt
the equity rally as it reflects optimism over economic growth
rather than inflation worries.
At the same time, they expect central banks’ policy stance
to remain fairly accommodative.
But, China is under scrutiny as Evergrande Group’s crisis is
unsolved while investors worry about the economic impact of
power shortages.
(Stefano Rebaudo)
*****
