U.S. equity futures extended declines Monday, while bond yields leaped to multi-year highs as investors prepped for a hectic week of earnings and economic data as well as the final policy meeting of the Federal Reserve under outgoing chairwoman Janet Yellen.
Wall Street futures suggest a softer start to the Monday trading session, with contacts tied to the Dow Jones Industrial Average marked 67 points to the downside after Friday's 221 point gain which lifted the benchmark to another record close of 26,614.02 points. The broader S&P 500, which ended Friday 1.18% higher at 2,872.79 points, is expected to slip around 9.5 points, or 0.33%, at the opening bell.
Lockheed Martin Corp. (LMT) is the biggest name in Monday's light earnings schedule, although around a third of the S&P 500 will report fourth quarter figures this week, including benchmark heavyweights Apple Inc. (AAPL) , Microsoft Corp. (MSFT) , Facebook (FB) and Amazon Inc. (AMZN) . Key economic data in the form of January consumer confidence (Tuesday), the ADP employment report (Thursday) and Friday's January non-farm payrolls will also likely keep traders focused on both the dollar and broader U.S. financial markets.
A modest overnight rebound for the U.S. dollar index, which bounded 0.24% from an extended three-year low to 82.27 in early European trading, failed to give regional stocks a boost as the Stoxx Europe 600 benchmark fell 0.22% to 399.67 points in the opening hours of trading. The euro, which had topped 1.25 for the first time in more than three years Friday, eased 0.1% to 1.2420 while the pound drifted by a similar percentage to around 1.4122.
Nokia OYJ (NOK) shares were a notable early mover, rising to the top of the market in Paris Monday after the network equipment maker unveiled a new 5G chipset amid reports that the U.S. may look to build its own super-fast network in order to counter the threat of spying from intelligence teams in China.
Nokia's ReefShark chips will hit the market in the third quarter of this year, the company said, and will significantly reduce both the size of the antennas used with 5G networks and the power needed to operate them. The chips will also boost data speed and capacity.
Nokia shares were marked 2.22% higher and changing hands at €3.96 each by mid-morning, giving the Helsinki-based group a market value of €9.65 billion.
The larger market moves, however, were seen in the fixed income space, where benchmark 10-year U.S. Treasury yields rose to a near four-year high of 2.71% amid increasing concerns over faster inflation readings in the world's biggest economy. Two-year notes were also on the move, rising to 2.15%, the highest since 2008. In Europe, five-year German bunds, a proxy for government borrowing costs, traded with a positive yield for the first time since 2015 after hawkish comments on the European Central Bank's policy stance from Governing Council member and Dutch central bank governor Klaas Knot.
#FED | Treasuries extended a selloff that's taking yields to the highest since early 2014 as traders gear up for a busy week of data and policy announcements. cc. @business @Schuldensuehner pic.twitter.com/0tvdR07cV6— Marc-Andre Fongern��️ (@Fongern_Chatham) January 29, 2018
Overnight in Asia, stocks kicked-off the week in a tentative fashion, with the region-wide MSCI Asia ex-Japan index slipping 0.02% into the close of trading and Japan's Nikkei 225 falling 0.01% to end the session at 23,629.34 points.
Global oil markets were similarly mixed, with WTI crude prices rising modestly despite a jump in U.S. production rates and Brent crude future slipping modestly from three-year highs as the dollar executed a modest rebound on foreign exchange markets.
Brent contracts for March delivery, the global benchmark, were seen 25 cents lower from Friday's close at $70.27 while WTI contracts for the same month were seen 5 cents higher at $66.19 per barrel.
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