U.S. stock futures point to gains for technology

Investors continued to train their attention in bond markets after a fall in the price of U.S. public debt last week. Ten-year Treasury bills regained some ground on Monday, generating yields at 1.682%, up from 1.729% on Friday. Yields fall as bond prices rise.

Yields have risen for seven consecutive weeks, affecting segments of the stock market that had benefited from several years of low interest rates. Technology stocks, in particular, have suffered the jump in long-term public lending costs. Future benefits are worth less when bond yields increase.

Technology stocks, including Apple, were ahead of the bell, as was electric vehicle maker Tesla, another beneficiary of bond yields.

Railroad Kansas City Southern jumped 17% in pre-market trade after agreeing to be bought by Canadian Pacific Railway in a transaction valued at about $ 25 billion.

The technology-dominated Nasdaq-100 suffered its fourth week of losses in five on Friday. Many investors expect bond yields to continue to rise as the economy accelerates, posing a challenge to the technology stocks that have driven the broader market into 2020.

“There is more upside for U.S. bond yields than downward,” said Edward Smith, head of asset allocation research at British investment firm Rathbone Investment Management. Shares “that earned exceptional returns last year probably won’t go so well for now,” Smith added.

That doesn’t mean investors have to give up technology stocks, according to Smith. Shares of giants such as Apple, Microsoft and Facebook have proven resilient in some days when Treasury yields have risen, he said. However, Smith added that money managers should be cautious about corners of the market with high valuations, such as shares in electric vehicle companies.

The Federal Reserve has so far indicated that it is not concerned about rising bond yields. President Jerome Powell is scheduled to speak at a debate on central bank innovation hosted by the Bank for International Settlements, starting at 9:00 ET.

Data on existing home sales should be presented at 10 a.m., which will allow investors a new view of the booming real estate market. Economists expect sales to fall in February, hampered by rising prices and bad weather in some parts of the country.

In foreign currency, the Turkish lira fell more than 9% to a price of 7.96 per dollar after the replacement of the country’s main central banker late last week. According to Jane Foley, head of foreign exchange strategy at Rabobank, the slide could increase investors’ nervousness about emerging market assets.

Combined with concerns about the trajectory of U.S. government bond yields, the fall of the Turkish currency means there is “a wide margin for trading conditions” in broader financial markets, Ms. Foley said.

In overseas markets, the Stoxx Europe 600 did not change much. Shares of AstraZeneca rose 1.5% after the British drug maker declared its Covid-19 vaccine to be safe and 79% effective in preventing symptomatic disease in U.S. clinical trials.

Shares of airlines, including British Airways-owned International Consolidated Airlines Group, fell after British officials and scientists questioned the likelihood of international travel this summer. Several continental European countries are facing a halt to vaccination programs and a jump in coronavirus cases.

Asian markets mixed at the close of trading. Shanghai’s composite index in China rose 1.1%, while Hong Kong’s Hang Seng index fell 0.4%. Japan’s Nikkei 225 fell 2.1%, lowered by carmakers after a fire at a factory owned by semiconductor maker Renesas Electronics.

Write to Joe Wallace to [email protected]