Nasdaq futures and Treasuries rallied as a powerful “rotation” caused by a brightening global economic outlook paused on Tuesday.
Futures tracking an index of the biggest 100 stocks on the technology-focused Nasdaq Composite jumped more than 2 per cent in mid-morning dealings in Europe. S&P 500 futures rose 1 per cent.
The pick-up comes after the Nasdaq Composite had slumped into correction territory — a 10 per cent fall from its February peak — with big tech names like Apple and Tesla sliding.
Stocks that underperformed at the height of the pandemic — such as banks and airlines — have begun picking up steam and leading the market.
The Stoxx 600 Bank Index has risen by 20 per cent this year and the Stoxx 600 Energy Index has gained 13 per cent. “We can certainly call this rotation,” said Jim Reid, research strategist at Deutsche Bank.
But that sharp shift paused on Tuesday. The region-wide Stoxx 600 index fell 0.1 per cent, Germany’s Xetra Dax lost 0.3 per cent and the UK’s FTSE 100 was flat in early trading.
Meanwhile, Treasuries gained in price, helping to relieve the upward pressure on American borrowing costs. The benchmark 10-year Treasury yield, which moves inversely to price, fell 0.05 percentage points to 1.54 per cent.
Bond traders said they would closely scrutinise the results of a three-year Treasury auction later on Tuesday. It marks the first of three crucial US bond deals this week that follow a grim auction of seven-year Treasuries late last month that added to recent volatility on the debt market.
In Asia, China’s CSI 300 fell 2.2 per cent, Hong Kong’s Hang Seng rose 0.1 per cent and South Korea’s Kospi lost 0.6 per cent.