Europe-Diverges-With-Tech-Heavy-US-And-Asia

Europe Equities Have Kicked Off The New Week On An Upbeat Note, Catching On To A Late Rally On Wall Street.

By Sophie Griffiths

Europe Equities Have Kicked Off The New Week On An Upbeat Note, Catching On To A Late Rally On Wall Street. Bourses are being led higher by energy stocks and travel and tourism firms as the economic reopening gets underway.

Wall Street closed last week on the front foot after US jobs data smashed forecasts proving that the US labour market is on the right path to recovery after bottoming out in December. The February NFP report indicated that the economy created 379 thousand new jobs, crushing the street consensus of 197 thousand.

The good news just kept on coming with China’s exports surging 60.6% YoY and the US Senate passing the Biden administration’s USD1.9 trillion stimulus bill. A move which has reignited rising inflation expectations, sending treasury yields marching higher.

The recovery in the US jobs market, an accelerating US covid vaccine programme, the reopening of states, and a USD1.9 trillion stimulus deal is a lot of good news in a short space of time, prompting concerns of the US economy overheating. US 10-year treasury yields are over 3% higher at 1.61%, a fresh yearly high. Further gains in treasury yields could weigh on the equity markets.

Asian markets fell overnight as more questions are being asked lofty valuation in tech stocks, dragging the sector lower. That same weakness is being reflected in Nasdaq futures which are also trading sharply lower.

European indices such as the DAX and the FTSE which are less focused on tech stocks and more angled towards value and cyclicals are holding up well despite the ongoing bond market rout. The oil and gas sector in Europe has surged 1% higher as oil prices rise whilst travel and tourism stocks are also outperforming as economies continue along their reopening journey. UK classrooms once again reopening feels like a huge step towards normalcy.

This news was originally published at Market Pulse.