US open: Tech stocks point sharply lower as bond selloff continues

The US Senate passed $1.9 trillion stimulus bill, sending bond yields and the USD sharply higher. Stocks have lost their shine and the high growth tech sector looks set to underperform.

USA (1)

US futures

Dow  futures -0.1% at 31431

S&P futures -0.5% at 3818

Nasdaq futures -1.5% at 12466

In Europe

FTSE -0.5% at 6628

Dax -0.2% at 14106

Euro Stoxx +0.9%% at 3704

Learn more about trading indices


Senate passes US stimulus bill, yields jump

Over the weekend the US Senate approved the Biden administration’s $1.9 trillion covid stimulus package with only minor amendments. This is the largest stimulus package in US history.

The news comes following Friday non farm payroll report which showed that 379k jobs were added in the US in February, double what analysts were expecting. The data suggests that the labour market bottomed in December and is now on the road to recovery.

The upbeat jobs report, massive stimulus package and acceleration of the vaccine rollout programme have boosted hopes of a strong economic recovery in the US this year. Inflation expectations have also risen.

The US 10 year bond yield ticked higher to 1.60% just shy of Friday’s 1.62% a level not seen since before the pandemic. The moved boosted the US Dollar whilst taking the shine off stocks, particularly high growth tech stocks.


Tech wreck resumes

The tech sector which is full of stocks with sky high valuations is particularly under the kosh on the back of surging yields. This is reflected in the Nasdaq which has fallen over 8% across the past three weeks.

Nasdaq futures are pointing to another weaker start for the index.

The tech sell off isn’t confined to the US, tech heavy Asia came under pressure overnight. However, European shares which are more tilted towards value are outperforming global peers.


Stocks are pointing lower

US stocks are pointing to a weaker start, paring gains from Friday as bond yield concerns return to haunt the market.

Microsoft – trades -1.2% pre-market after 20,000 US organisations could be compromised following a hack of the Outlook email programme.

Amazon – 1.4% pre-market on the back of the tech selloff and after Deliveroo recorded a loss of $300 million last year. Deliveroo also announced plans to IPO in London. Deliveroo will target a valuation of $10 billion after the top line grew 54% across the year of the pandemic.

Where next for Amazon share price?

Amazon has slipped below the key psychological 3000 level pre-market. It trades below its 50 & 100 sma on  a bearish chart with the RSI supportive of further declines. 2875 offers strong support having capped losses in July and September. The bulls would need a move above 3200 50 & 1000 sma to gain traction.



FX – Dollar strengthens as yields rise

US Dollar Index is charging higher as US bond yields resume their rise. US Dollar index trades +0.25% at 92.25.

EUR/USD tumbled below 1.19 to a 4-month low. Data hasn’t been that helpful with German Industrial Production Jan -2.5% MoM, down from 1.9% in December and well short of 0.2% rise expected. However, Eurozone Investor Sentiment numbers for March were more encouraging jumping to 5 after declining -0.2% in February. Optimism surrounding the vaccine rollout and reopening of economies in the bloc has boosted morale.

GBP/USD trades -0.03% at 1.3837

EUR/USD trades -0.4% at 1.1870


Oil eases back from over $70

Oil prices are easing back after gapping sharply higher on the open. Brent surged through $70 for the first time since the pandemic started before giving back some of those gains.  Meanwhile WTI crude oil hit its highest level in over 2 years at just shy of $68, before slipping back.

Oil prices surged after Houthi rebels launched an attack on oil facilities in Saudi Arabia. As reports emerged that there was no damage to the facilities oil markers were reassured as the price came away from the highs.

The prospect of a stronger US economic recovery on the back of a stimulus package is also helping to keep oil elevated. In addition to last week’s news that OPEC won’t increase production until at least April.

Analysts Fiona Cincotta looks at the price movement in WTI and levels to watch here.

US crude trades +0.3% at $66.30

Brent trades +0.25% at $69.53

Learn more about trading oil here.

The complete guide to trading oil markets


Looking ahead

There is no major US data due to be released today.


Build your confidence risk free

More from Indices

Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.