European Stock Futures Mixed; Chinese Exports Surge, Yields Rise

This post was originally published on this site – European stock markets are seen opening mixed Monday, with investors fretting about higher U.S. Treasury yields even as hopes for a global economic recovery from the Covid-19 pandemic grow.

At 2:05 AM ET (0705 GMT), the DAX futures contract in Germany traded 0.3% lower, CAC 40 futures in France climbed 0.8% and the FTSE 100 futures contract in the U.K. fell 0.2%.

Optimism is growing that a global economic recovery from the ravages of the Covid-19 pandemic is just around the corner. China’s exports surged in the first two months of the year, up over 60% in dollar terms, reflecting strong global demand for manufactured goods.

Additionally, the U.S. Senate passed the $1.9 trillion stimulus package, proposed by President Joe Biden earlier this year, over the weekend. This raises the likelihood that this bill will be passed into law before enhanced jobless benefits expire on March 14.

Equity markets have been boosted over the last few months by the expectation that loose fiscal and monetary policy will give a powerful boost to the economic recovery, but optimism has been tempered by fears over rising inflation and interest rates. 

The yield on the benchmark Treasury 10-year note has risen sharply in recent weeks, climbing as high as 1.62% on Friday after starting the calendar year below the 1% mark. It currently stands at 1.59%.

This rapid surge has also unnerved equity investors, putting pressure on stocks with high valuations, particularly the high-growth stocks which had contributed so much to the sharp equity market gains of the last few months.

In corporate news, earnings come from the likes of Pearson (LON:PSON) and Direct Line (LON:DLGD), while the oil majors will also be in the spotlight after crude prices soared Monday in the wake of attacks on key Saudi Arabian oil facilities.

Yemeni Houthi forces fired drones and missiles to target the Saudi Arabian oil industry on Sunday, including Saudi Aramco’s facility at Ras Tanura, which is capable of exporting roughly 6.5 million barrels a day.

The missiles were intercepted, but the move by the Iran-backed Houthi is the latest in a series of attacks on Saudi Arabia and follows a recent rise in Middle Eastern tensions. 

U.S. crude futures traded 1.6% higher at $67.14 a barrel, just off its highest level since October 18, while the international benchmark Brent contract rose 1.7% to $70.56, climbing above $70 a barrel for the first time since the pandemic began.  

Elsewhere, gold futures fell 0.1% to $1,697.55/oz, while EUR/USD traded 0.2% lower at 1.1891.