European stocks rose on Monday while U.S. technology stock futures slumped, with bond yields near one-year highs as the world’s largest economy was on the verge of adding $1.9 trillion in stimulus.
The U.S. Senate over the weekend passed its version of the $1.9 trillion stimulus package, sending it back to the U.S. House for approval before President Joe Biden can sign it into law. The surge in bond yields — with the 10-year Treasury
up 64 basis points in 2021, through Friday — has led investors to rotate from assets perceived as having stretched valuations, like companies in the tech sector, and into out-of-favor sectors with less demanding valuations.
The Stoxx Europe 600
rose 0.6%, with companies that have struggled during the COVID-19 pandemic leading the way. Cruise operator Carnival
oil services firm TechnipFMC
tourism conglomerate TUI
and shopping-mall operator Klepierre
topped the leader board.
Support Our News Campaign
Shop our StoreClick Here To Shop
Futures on the tech-heavy Nasdaq-100
Florent Pochon, a strategist at French bank Natixis, said there are plenty of reasons for markets to be jittery, but he expects any tantrum for stocks to be limited as long as the Federal Reserve remains dovish.
“In terms of valuation, the U.S. 10-year does appear to be approaching fair value, bearing in mind all the uncertainty determining quite what it is,” he said. “Massive as the U.S. fiscal stimulus plan might be, it is not expected to generate elevated structural inflation, but rather deepen the country’s trade deficit.”
Shares in educational publisher Pearson
fell as much as 5% before then turning around and rising 5%. The company’s results and outlook were largely in line with expectations as it set out plans to sell its international courseware local publishing businesses and occupy less property.
Subscribe to the newsletter news
We hate SPAM and promise to keep your email address safe