European stocks edged higher at the start of trading Tuesday, while U.S. equity futures suggested and opening bell pullback on Wall Street as investors brace for nearly $260 billion in new debt auctions that could push bond yields higher and reignite a new round of volatility in global markets.
The region-wide Stoxx 600 index gained 0.21% to 379.04 points in the opening minutes of trading, thanks in part to solid gains for benchmarks in Germany and France, which rose 0.4% and 0.3% respectively. Britain's FTSE 100 edge just 0.1% higher, however, with the index held down by notable declines for heavyweights BHP Plc (BHP) - Get Report and HSBC plc (HSBC) - Get Report
HSBC shares fell 2.68% to 740.10 pence each in early London trading after Europe's biggest bank missed analysts' forecasts with its full-year earnings and said it would take a $1.3 billion writedown on its U.S. tax credits following last year's Republican-led overhaul of the corporate tax code. BHP, meanwhile, was marked 2.7% lower even as it boosted its annual dividend and topped analysts' forecasts for its 2017 earnings as investors focused on rising cost pressures in the world's biggest miner.
Early indications from Wall Street futures are pointing to a modestly lower open, with contracts tied to the Dow Jones Industrial Average priced 85 points, or 0.34%, lower than their Friday close while those tied to the broader S&P 500 suggest a 7 point, or 0.26% decline after last week's 4.3% gain, the best five-day run since 2011.
Just of 50 U.S companies will publish fourth quarter earnings this week, including Walmart Stores (WMT) - Get Report , Home Depot (HD) - Get Report , Hewlett Packard Enterprises (HPE) - Get Report and Warren Buffett's Berkshire Hathaway (BRK.B) - Get Report
With around two thirds of the S&P 500 reporting so far this season, Thomson Lipper expects fourth quarter earnings to grow 15% from the same period in 2016, compared to a 14.6% expansion rate for the Stoxx Europe 600.
However, the bigger story this week is likely to be the market's reaction to $258 billion in new debt sales from the U.S. Treasury, which kicks off today with an auction of $151 billion in short-term Treasury bills, and their impact on an already bearish bond market. Benchmark 10-year note yields rose 3 basis points in overnight Asia trade to change hands at 2.91%, pulling the dollar index from its recent three-year low against a basket of its global peers to trade 0.47% higher at 89.52.
The dollar's overnight gains disrupted the recovery in Asia stocks overnight, with the MSCI ex-Japan benchmark falling 0.12% into the close of trading and Japan's Nikkei 225 giving back 1.01% to end the day at 21,925.10 points as the still-surging yen trimmed investor appetite for export related stocks.
Global oil prices were also active, and heavily-influenced by the dollar's two-day winning streak, with Brent crude prices drifting lower in lockstep with the greenback's gains to trade 0.3% lower at $65.46 per barrel.
WTI futures for April delivery, however, added 0.75% to trade at $62.15 per barrel as investors focused on slowing inflows of crude oil from Canada, via the disrupted Keystone pipeline, and largely discounted last week's Energy Information Administration data which would U.S. production surpassing the 10 million barrel per day mark and figures from Houston-based oil services provider Baker Hughes showing that rig counts have risen for four consecutive weeks to a total of 789 units in and around the United States.