Yahoo FinanceUS Stock Futures Drop as High Yields Sour Mood: Markets Wrap

(Bloomberg) -- US stocks were poised to extend their retreat as Treasury yields near the highest level this year fanned concern about restrictive monetary policy.
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Futures for the S&P 500 fell 0.5%, pointing to a second day of declines. Salesforce Inc. tumbled 17% in premarket trading on slowing sales growth. Europe’s Stoxx 600 benchmark was led higher by telecom and banking stocks. Ten-year Treasury yields steadied after jumping about 15 basis points in the past two days.
Global equities are headed for their worst week since mid-April as US rate-cut expectations dwindle with inflation still sticky. Another tepid US auction result on Wednesday heightened worries that funding the US deficit will drive up yields at a time when the Fed is in no rush ease policy.
Remaining data this week could prove key as investors refine their monetary policy outlook: The US posts gross domestic product numbers later Thursday, which will likely be lower from an initial print, and Fed officials including New York Fed President John Williams and Atlanta Fed President Raphael Bostic are due to speak. Inflation reports from the US and Europe are coming Friday.
As optimism over US rate cuts fades, BlackRock International Ltd. is sticking to the front end and the belly of the US Treasuries curve, according to Karim Chedid, the firm’s EMEA investment strategy head.
“We see that as the area where you’re still getting the most bang for buck in terms of income for stability,” he said in an interview with Bloomberg Television.
While the scorching rally in tech companies is underpinned by fundamentals and remains one of BlackRock’s “key sector overweights,” Chedid says he’s seeing growing inflows into European and Japanese equities.
The prospect of a rate cut from the European Central Bank at its June meeting is helping, as is “a bottoming out in the macro data in Europe, which investors are liking,” Chedid said. “Earnings have seen a significant upgrade in Europe over the past 12 months.”
Rand Slides
Elsewhere, the rand extended losses and banking stocks fell as South Africa’s election vote count gathers pace. The ruling party looks set to fall well short of obtaining a parliamentary majority for the first time since it came to power.