Global Stocks Slip as 3% 10-Year Yields, Bad Tech News Unsettle Markets
All eyes on yields.

One Stat You Need to Know

  • The concerns over 10-year yields passing 3% should be balanced with strength in Corporate America. First quarter earnings have seen 83% of companies beating profit estimates, the best ratio in more than two years according to Fundstrat's Tom Lee. Profits are tracking up 20% year-over-year, led by technology, materials, energy and financials. Via @BrianSozzi

Market Snapshot

European stocks opened weaker Monday, as U.S. equity futures drifted into negative territory to start the week on Wall Street, as investors braced for a busy slate of corporate earnings over the next five days and re-set expectations for interest rates and inflation amid an ongoing surge in global oil prices.

The region-wide Stoxx Europe 600 slipped 0.15% in the opening hours of trading, with major benchmarks in Europe falling around 0.3% as crude continues to hold past three year highs following last week's meeting of OPEC officials in Jeddah. Crude's 14.4% rally over the past six weeks has also lifted global government bond borrowing costs, taking benchmark 10-year U.S. Treasury yields to 2.996%, the highest since 2014, and lifted the dollar index, a measure of the greenback against a basket of six global currencies, to 90.63, the highest since early January.

Two of the biggest early movers in the session include Fresenius Medical Care AG & Co KGaA  (FSNUY) , which fell 4% after the German group said it would no longer pursue its planned acquisition of Akorn Inc.  (AKRX)  following a U.S. FDA probe into possible data breaches at the Lake Forest, Ill.-based generic drugmaker.

UBS AG (UBS) , Switzerland's biggest investment bank, fell 3.08% after it posted a 23% rise in pre-tax earnings but disappoint investors with a relatively tepid forecast for investment bank profits in the year ahead. 

Those moves will likely both help and hurt U.S. markets on Wall Street today, with energy and financials leading gainers and pushing futures contracts tied to the Dow Jones Industrial Average 14 points lower from Friday's 24,462.94 close. Contracts tied to the broader S&P 500 were also seen 0.05% lower in early trading ahead of a week in which 180 companies will report first quarter earnings, including major "FAANG" tech stocks such as Amazon (AMZN) , Google parent Alphabet (GOOGL) and Facebook (FB) .

80% of $SPX companies have beaten EPS estimates to date for Q1, above the 5-year average (70%). https://t.co/oHMkuH7WOh pic.twitter.com/tsHMA6wXVQ

— FactSet (@FactSet) April 20, 2018

The current earnings season has started off strongly, with 80% of the S&P 500 companies reporting having beaten Street forecasts, according to data compiled by FactSet, compared to the five year average.

"In terms of sales, more companies (72%) are reporting actual sales above estimates compared to the five-year average," FactSet noted in a recent update. "In aggregate, companies are reporting sales that are 1.6% above estimates, which is also above the five-year average."

A strong earnings season for tech stocks, however, will likely be necessary for U.S., and indeed global, markets to sustain their current rally as the sector comes under increasing pressure over concerns linked to data use by social media firms and suggestions that smartphone demand may be waning as the so-called "supercycle" for the global semi conductor industry comes to an end.

Overnight in Asia, part of that dynamic was in place as benchmarks around the region faded in the face of weak tech stocks -- particularly companies in Apple's (AAPL) supply chain following last week's research note from Morgan Stanley's Katy Huberty which forecast "materially" weaker iPhone sales.

The broadest measure of regional stocks, the MSCI Asia ex-Japan index, slipped 0.32% into the close of trading Monday while Japan's Nikkei 225 fell 0.2% to close at 22,114.03 points on the first session of week.

Oil prices, however, remained close to the their three year peaks, despite last week's Twitter salvo against OPEC from President Donald Trump, with Brent crude contracts for June delivery marked at $73.91 a barrel and WTI contracts for the same month trading modestly lower from Friday's close at $68.09 per barrel.

Amazon, Alphabet Facebook and Apple are holdings in Jim Cramer's Action Alerts PLUS.

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