Stocks Edge Lower; Treasury Yield Nears 3%
April 23 2018 - 5:48AM
Dow Jones News
By Joanne Chiu and Riva Gold
-- Treasury yields keep climbing
-- Asian tech under pressure
-- Alphabet to report earnings
Global stocks started the week slightly lower as investors
parsed a mixed set of corporate results, with equities showing only
a muted response to a selloff in bonds that sent the 10-year
Treasury yield near 3%.
The Stoxx Europe 600 edged down 0.2% in morning trading, echoing
modest losses in Asia. Futures pointed to a 0.2% opening decline
for the S&P 500 after a late-session decline in consumer goods
companies sent the index lower on Friday.
Stocks appeared to show only a limited reaction as U.S. Treasury
yields hit multiyear highs. A rise in February contributed to a
steep selloff in stocks as investors worried about higher
inflation, tighter monetary policy and more competition from the
bond market.
Yields on 10-year Treasurys last climbed to 2.985% after
settling at 2.949% late Friday in New York, the highest level since
January 2014. Yields move inversely to prices.
Fund managers surveyed by Bank of America Merrill Lynch in April
said they view 3.5% as the yield level that would cause investors
to rotate from equities back into bonds.
Eric Robertsen, global head of forex, rates and credit research
at Standard Chartered, said the rising 10-year yield comes as
higher commodity prices lift inflation expectations.
Brent crude oil was last down 0.4% at $73.80 a barrel, but is up
5% on the month. Still, Mr. Robertsen sees U.S. inflation
ultimately rising modestly, capping long-term yields.
Shorter-term Treasurys have seen even faster price declines this
year, resulting in yield spreads narrowing to levels not seen in a
decade.
In Europe, shares of UBS Group fell 4% after the Swiss bank
reported first-quarter results, weighing down the European banking
sector despite a continued rise in government bond yields, which
tends to boost lending income.
Among gainers in European stocks, shares of Royal Philips were
up 3.3% after the Dutch technology company reported results and
backed its outlook for 2017-20. Shares of Fresenius rose 2.1% after
saying on Sunday it is terminating its $4.3 billion agreement to
buy generic-drug maker Akorn, although Akorn said they intend to
see the deal through.
Asian stock markets mostly inched lower following a decline in
U.S. equities late last week. Japan's Nikkei Stock Average edged
down 0.3% and Hong Kong's Hang Seng fell 0.5%.
Chinese small-caps and Taiwanese stocks were weak, with Taiwan
Semiconductor falling a further 1.1% after Friday's 6.3% drop. The
company's warning on second-quarter sales pressured global tech
stocks at the end of last week.
The U.S.'s move last week to ban American companies from selling
products to Chinese telecommunications-equipment giant ZTE also
weighed down technology shares there.
However, trading volume in Hong Kong and China was lighter than
normal ahead of a possible trade breakthrough between the U.S. and
China. U.S. Treasury Secretary Steven Mnuchin may visit Beijing to
talk trade.
The WSJ Dollar Index, which tracks the dollar against a basket
of 16 currencies, was last up 0.2% after settling at its highest
since January.
Write to Joanne Chiu at joanne.chiu@wsj.com and Riva Gold at
riva.gold@wsj.com
(END) Dow Jones Newswires
April 23, 2018 05:33 ET (09:33 GMT)
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