European stocks, futures mixed as bonds stabilise

Bloomberg

Stocks and futures were mixed as the global sovereign-bond selloff paused and investors turned their focus to corporate earnings.
Energy companies were among the biggest declines in Europe’s Stoxx 600 Index, as crude oil slipped from a seven-year high, while the rally in metals boosted miners. US futures advanced.
Treasury yields dipped, but remain higher for the week on concerns about elevated inflation and the prospect of Federal Reserve interest-rate hikes. UK and German benchmarks were little changed. A dollar gauge was steady and gold held around a two-month high.
The dominant theme for markets remains prospective Fed rate hikes and the possible reduction of its holdings in Treasuries starting later in 2022. The withdrawal of outsized stimulus threatens to inject more volatility across a range of assets. Global stocks have already dropped more than 3% this year.
“The focus of the rates market is still very much on the Fed and the anticipated dual-pronged attack of interest rate rises and balance sheet reduction, all of which we would expect to keep uncertainty levels elevated and volatility bubbling along over the coming weeks/months,” Simon Ballard, chief economist at First Abu Dhabi Bank, wrote in a note.
Meanwhile, European Central Bank President Christine Lagarde said the ECB has “every reason” not to respond as forcefully as the Fed to soaring consumer prices. The central bank has come under pressure to act, but officials say an interest-rate increase is highly unlikely this year since the current bout of inflation is driven by supply shocks and a spike in energy costs.
Among individual stock moves in Europe, Soitec sinks as much as 17% after the executive committee at the French semiconductor company released a letter criticising the board for an “incomprehensible” choice of new chief executive. Alstom SA fall safter sales missed estimates.
Meanwhile, Deliveroo Plc rises after saying orders grew faster than expected in the fourth quarter and Unilever Plc climbed after abandoning its 50 billion-pound ($68 billion) pursuit of GlaxoSmithKline Plc’s consumer products division.
The earnings season so far has been a little bit rocky, and investors need to monitor commentary from companies about price and wage pressures, Rebecca Felton, RiverFront Investment Group senior market strategist, said on Bloomberg Television.
“We do believe stocks can continue to go higher even as the Fed changes policy,” she said, adding corporate profits will still likely beat estimates. The Stoxx Europe 600 falls 0.2% and futures on the S&P 500 rise 0.2%.
While futures on the Nasdaq 100 climb 0.3%, futures on the Dow Jones Industrial Average also rise 0.2%. The MSCI Asia Pacific Index falls 1.3% and the MSCI Emerging Markets Index also drops 0.1%.
The Bloomberg Dollar Spot Index was little changed and the euro rises 0.2% to $1.1362. The Japanese yen was unchanged at 114.33 per dollar and the offshore yuan was little changed at 6.3468 per dollar. The British pound rises 0.1% to $1.3631.
The yield on 10-year Treasuries declines two basis points to 1.85% and Germany’s 10-year yield was little changed at
-0.01%.
Britain’s 10-year yield was little changed at 1.26%
Brent crude falls 1% to $87.58 a barrel and spot gold was little changed.