By Anna Hirtenstein
U.S. stock futures pointed to a mixed open, with technology
shares surging and pandemic-sensitive stocks broadly lower amid
fears of disruption to coronavirus vaccine supplies.
Securities linked to the Nasdaq-100 advanced 1%, suggesting a
rally in tech stocks after the opening bell and an extension to
last week's gains that saw the index notch a record Friday. Those
tied to the Dow Jones Industrial Average slipped 0.5%.
"You're getting rotation out of the more cyclical stocks. These
big tech stocks are perceived as a bit of a haven trade," said
Michael Hewson, a chief markets analyst at CMC Markets. "There's
also talk of disruptions to vaccine supply, so we'll likely have
slower vaccine rollout and tighter restrictions for longer. What
we're seeing is a recovery deferred, or delayed."
Pharmaceutical giant Merck scrapped its plans to develop a
Covid-19 vaccine after trials yielded disappointing results,
pulling a major player out of the race amid heavy demand for shots.
This came after AstraZeneca warned on Friday that its vaccine
deliveries to the European Union would lag projections.
More than one-fifth of the broad S&P 500 index and a third
of Dow Jones Industrial Average components are scheduled to release
earnings this week. Starbucks, Verizon and Microsoft are slated for
Tuesday. Other major tech firms are reporting later in the week,
including Apple, Tesla and Facebook on Wednesday.
"The way that management will communicate their outlook will be
key for markets," said Sophie Chardon, a cross-asset strategist at
Lombard Odier. "Investors will have to weigh the possibility of
vaccinations with the reality of new lockdowns" and the impact on
Ahead of the opening bell, Apple shares climbed 2.7%. Data
analytics firm Palantir Technologies jumped 4.5% and online
marketplace Etsy added 1.5%. Kleenex and Huggies maker Kimberly
Clark rose 1.4% after it said it expected net sales to rise in
2021, raised its quarterly dividend and announced a $5 billion
share buyback program.
The pandemic and months of stay-at-home orders have split the
economy into companies that benefit and those that suffer. The
biggest tech companies are largely seen as benefactors, as firms
and households increase their use of digital technology as they
The spread of new coronavirus variants has prompted retightened
lockdown measures around the world and more uncertainty around the
timeline of a return to normal, which may translate to another
boost in demand for tech.
In premarket trading, real-estate firm Tishman Speyer's
special-purpose acquisition company TS Innovation Acquisitions
soared nearly 75% after it said it would merge with Latch, a smart
lock maker, to take the company public.
Also ahead of the opening bell, GameStop's stock surged over
50%, with more than a million shares changing hands. The videogame
retailer has been at the center of a fight between bullish day
traders communicating on the internet forum Reddit, and short
sellers, who bet heavily against the stock. Hedge fund Melvin
Capital is among those that lost money from this.
Overseas, the pan-continental Stoxx Europe 600 fell 1%, which
analysts attributed to reports that the U.K. and France were
heading toward tighter lockdown measures.
European Central Bank policy makers will hold speeches Monday.
ECB President Christine Lagarde is expected to speak at the World
Economic Forum's annual Davos conference, which will take place
virtually this week.
In European equities, travel stocks were among the worst
performers. Politicians in the U.K. and France are contemplating
tighter restrictions amid the spread of coronavirus mutations,
according to analysts at RBC Capital Markets. British Airways-owner
International Consolidated Airlines tumbled 7.8%, Ryanair slipped
5.1% and aircraft engine-maker Rolls Royce declined nearly
EDF shares slumped over 18% following reports that France and
the European Union won't reach an agreement to restructure the
French utility company in the near future.
In Asia, most major stock benchmarks rose. The Shanghai
Composite Index added 0.5% and Hong Kong's Hang Seng Index climbed
2.4%, buoyed by the rally in tech shares. South Korea's Kospi Index
advanced 2.2%. The index's heavyweight Samsung Electronics rose 3%
and chip maker SK Hynix ticked up over 5%. Both are slated to
report earnings this week.
China's most valuable internet company, Tencent Holdings, jumped
nearly 11% to a record high in Hong Kong trading. Tencent portfolio
company Kuaishou Technology, a TikTok-like video-recording app,
announced a coming initial public offering that may value it at
about $60 billion. Amsterdam-listed shares of tech investment group
Prosus, one of Tencent's biggest shareholders, rose 5.5%.
In bond markets, the yield on the benchmark 10-year U.S.
Treasury bond edged down to 1.063%, from 1.090% Friday.
Negotiations over President Joe Biden's plan for additional
fiscal stimulus will be an area of focus for investors. His
proposal for a $1.9 trillion spending package was discussed by
lawmakers Sunday and is likely to be worked on this week.
Sebastian Mackay, a multiasset fund manager at Invesco, thought
a package could be passed in the next couple of weeks. For markets,
"it's about the extent to which the [Federal Reserve] is still in
play, while the fiscal stimulus is coming through," he said.
Write to Anna Hirtenstein at firstname.lastname@example.org
(END) Dow Jones Newswires
January 25, 2021 09:27 ET (14:27 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.