1. U.S. Futures, Europe Stocks Decline as Tech Slumps
U.S. equity futures slid with European stocks on Tuesday as the jump in bond yields and commodity prices continued to hammer technology shares. Nasdaq futures slumped 1.7% a day after the tech-heavy gauge posted its longest losing streak in four months. Tesla dropped 5% in pre-market trading as investors continued to punish stocks that have led the rally from the depths of the pandemic a year ago. In Europe, tech shares dragged the Stoxx 600 Index lower. Budding inflation bets spurred by the global economic recovery are adding to pressure on equities. Treasuries steadied on Tuesday after the gap between 5- and 30-year yields touched the highest level in more than six years. Copper extended gains, while WTI crude rose to around $62 a barrel.
Futures on the S&P 500 Index declined 0.5% as of 8:20 a.m. New York time.
The Stoxx Europe 600 Index fell 0.8%.
The MSCI Asia Pacific Index advanced 0.1%.
The MSCI Emerging Market Index was little changed.
2. Texas Energy Crisis to Trigger Bankruptcy in Energy Companies
The Texas power crisis is threatening to spark a new wave of distress. Canadian energy retailer Just Energy on Monday said it may have trouble continuing as a going concern after last week’s freezing weather cost it about $250 million. Extreme gyrations in regional U.S. gas and electricity prices because of the cold weather in Texas also affected the finances of other companies. Atmos Energy, one of the largest independent suppliers of gas in the U.S., revealed Friday that it’s looking to raise cash after committing to spend as much as $3.5 billion to secure fuel during the freeze.
3. Facebook Ends Australia News Blackout After Law Compromise
Facebook backed down from its news blackout in Australia after the government agreed to amend world-first legislation forcing the tech giant and Google to pay local publishers for content. The social-media platform switched off news sharing in Australia last week in opposition to the proposed law, and Mark Zuckerberg and government officials have been locked in talks to find a compromise. Among key concessions, the government said Tuesday it would take into account commercial deals Google and Facebook reach with news companies before deciding whether they are subject to the law, and would also give them one month’s notice.
4. Elon Musk Loses $15 Billion in a Day After Bitcoin Warning
Elon Musk is no longer the world’s richest person after Tesla shares slid 8.6% on Monday, wiping $15.2 billion from his net worth. Tesla’s biggest decline since September was fueled in part by Musk’s comments over the weekend that the prices of Bitcoin and smaller rival Ether “do seem high.” His message — via his favoured medium of Twitter — came two weeks after Tesla announced it added $1.5 billion in Bitcoin to its balance sheet. The cryptocurrency, which has surged more than 400% over the past year, tumbled for a second day on Tuesday, at one point slipping below $50,000 on scepticism over the durability of its rally.
5. Thailand Mulls Waiving Quarantine for Vaccinated Tourists
Thailand may scrap its two-week mandatory quarantine for foreign visitors with proof of Covid-19 vaccination as the Southeast Asian nation seeks to revive its pandemic-hit tourism industry. The plan to ease rules for tourists signal a shift in Thailand’s stance after months of insisting all visitors must stay in quarantine in the absence of enough evidence that inoculations can prevent virus transmission. If implemented, the move could bolster Thailand’s tourism sector that contributed about one-fifth to the nation’s pre-pandemic economy.
6. China’s Overseas Energy Lending Tumbles to Lowest Since 2008
China’s overseas energy financing dropped to the lowest level since 2008 after the pandemic hampered deal-making in developing nations. Financing for foreign energy projects, including power plants and mines, fell by 43% to $4.6 billion, which tracks data from two state-owned development banks. More than half of the lending was for a natural gas pipeline project in Nigeria. The impact of coronavirus added to a trend of dwindling project financing for the energy sector from President Xi Jinping’s Belt and Road Initiative. Infrastructure projects funded by China’s program in developing nations, such as Pakistan and Sri Lanka, have suffered issues including heavy debt loads.
7. U.K. Domestic Stocks Jump on Reopening Plan
U.K. domestically oriented stocks gained on Tuesday as travel and entertainment shares surged after Prime Minister Boris Johnson announced plans to reopen the economy. The FTSE 250 index of mid-cap U.K. shares jumped as much as 1.4%, paring its gains to 0.2% in London, after Johnson pledged to ease lockdown rules in stages over the next four months, including the possibility of international trips restarting as soon as May 17. The outperformance was especially pronounced as the European benchmark Stoxx 600 fell 1.2%. The news brought relief for cyclical and domestically oriented companies that have been suffering during the past year of the pandemic as lockdowns weighed on economic growth and consumer spending.
8. Debt Markets Brace for Higher Yields to Stay as Stimulus Sets In
President Joe Biden’s $1.9 trillion relief plan, plus the prospect of more stimulus later this year, is setting the stage for a shift away from historically low Treasury yields that’s likely to lead to a pickup in volatility in currency markets. U.S. yields have marched higher even before the plan’s arrival — offering an inkling of what may be in store. For weeks, the million-dollar question for many investors was whether the $1.9 trillion relief plan would flow mainly through financial markets — as the first package did — or actually find its way more into the U.S. economy, where it could trigger changes in spending and investment magnitudes greater than the original size of the stimulus. The wave of reflation bets sweeping through global markets indicates the latter narrative is taking greater hold, suggesting such trades may have room to run.
9. UAE to Supply First Air Missile Defense to Germany
The United Arab Emirates said it will supply its first locally manufactured air defence missiles to German security contractor Rheinmetall. Halcon, a unit of state-owned Edge Group, designed the SkyKnight missile system to provide early warning signals and counter threats from aircraft, unmanned aerial vehicles and rockets, according to the announcement made during Abu Dhabi’s International Defense Exhibition and Conference on Tuesday. The missiles will be part of Rheinmetall’s Skynex defence system. Oil-rich UAE has undertaken to localize arms production and exports amid a push to diversify its economy and become less dependent on foreign companies, particularly defence contractors.
10. Home Prices in U.S. Cities Jump at Fastest Pace Since 2014
Home prices in 20 U.S. cities surged in December, with low mortgage rates fueling the housing market. The S&P CoreLogic Case-Shiller index of property values climbed 10.1% from a year earlier and was the biggest jump since 2014. Phoenix, San Diego and Seattle posted the biggest gains in prices. Historically low mortgage rates have fueled a pandemic housing rally, with a scant inventory of homes to buy helping to boost prices. December was the fourth straight month that prices gained the most since 2014. The rally started in July and picked up steam in the final months of 2020, with Americans looking to take advantage of low borrowing costs to buy suburban homes.
Curated from Bloomberg.com
