Stocks, US futures edge higher as cyclicals lead

Bloomberg

European stocks edged higher with US futures on Wednesday as cyclical shares outperformed and the rally in the technology sector appeared to lose steam.
The Stoxx Europe 600 Index swung between losses and gains as automakers, energy firms and banks led the gauge. The exception was mining stocks, which hit a three-week low amid declining iron ore prices. Just Eat Takeaway.com NV gained after announcing it expects a further acceleration of order growth in 2021
compared with last year.
In the US, futures on the Dow Jones Industrial Average and the Russell 2000 indexes outperformed, while Nasdaq 100 contracts drifted after the underlying benchmark advanced nearly 4% amid a surge in growth stocks. Treasury yields steadied below their recent peaks as the first in a string of US auctions went off without disrupting markets.
While the pullback in Treasury yields spurred a rush into stay-at-home winners, the rotation from growth to value shares looked set to resume on Wednesday. Congress is poised to send the $1.9 trillion Covid-19 relief plan to President Joe Biden for his signature, while vaccinations are picking up amid further signs of economic recovery. Upcoming consumer prices data in the US are also expected to show a slightly faster annual increase.
The rising trend in bond yields is consistent with economic growth expectations, said Lauren Goodwin, portfolio strategist at New York Life Investments. That backdrop still favours cyclicals over defensive assets and “supports equities over bonds, and a weaker US dollar,” she said.
Elsewhere, oil was steady as the dollar strengthened. The Australian dollar fell after the central bank governor suggested markets may be getting ahead of themselves by pricing in an interest-rate increase within the next couple of years.
Futures on the S&P 500 Index were little changed at 9:04 am London time and
the Stoxx Europe 600 Index
increased 0.1%.
While the MSCI Asia Pacific Index gained 0.3%, the MSCI Emerging Market Index rises as much as 0.7%. The Bloomberg Dollar Spot Index jumped 0.1% and the euro was little changed at $1.1898.
While the British pound was little changed at $1.3889, the onshore yuan strengthened 0.1% to 6.505 per dollar. The Japanese yen weakened 0.2% to 108.71 per dollar.
The yield on 10-year Treasuries rise two basis points to 1.55% and the yield on two-year Treasuries increased less than one basis point to 0.16%.
While Germany’s 10-year yield gained less than one basis point to -0.30%, Britain’s 10-year yield was unchanged at 0.727%. Japan’s 10-year yield gained less than one basis point to 0.128%.
While West Texas Intermediate crude was little changed at $64 a barrel, Brent crude declined 0.2% to $67.41 a barrel. old weakened 0.1% to $1,713.56 an ounce.