- Global stocks edged higher on Tuesday after tech stocks took a beating as yields ground higher.
- Investors are waiting for Friday's US non-farm payrolls for clarity on the outlook for Fed policy.
- Another Chinese property developer, Fantasia, missed a bond payment due Monday.
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Global stocks recovered losses on Tuesday, after tech-heavyweights tumbled the previous day on concern that surging raw material prices are adding to inflationary pressures, while oil prices steadied after hitting multi-year highs.
Futures on the Dow Jones and S&P 500 rose 0.2% each, while those on the Nasdaq rose 0.4% as of 4:30 a.m. ET, suggesting a slightly higher start to trading later in the day.
On Monday, the S&P 500 fell to its lowest since July and the Nasdaq shed more than 2%, dragged down by mega-cap tech stocks including Amazon and Facebook. The latter fell by almost 5% in regular trading after a massive outage that lasted almost six hours paralyzed all its services.
"Non-transient inflation leading to interest rate rises bashed technology stocks," said Jeffrey Halley, senior market analyst at OANDA. Mega-cap tech stocks were slammed in particular due to their sensitivity to potentially higher US interest rates, which could be brought on by a Fed taper or a US government debt default, he added.
Investors are looking ahead to Friday's US non-farm payrolls for some clarity on the Federal Reserve's tapering decision. The Fed is likely to announce a plan for reducing asset purchases at its November meeting, unless Friday's employment report shows job losses rather than gains, said Rob Haworth, a senior investment strategist at US Bank Wealth Management.
The dollar index was last up 0.19% to 93.96, while gold inversely fell 0.4% to $1,760 an ounce.
Market watchers are factoring in a combination of US fiscal uncertainty, shaky stock markets, ballooning commodity prices, and tapering by the Fed pushing US yields higher, Halley said. Concerns about inflation expectations supported higher yields, with those on 10-year Treasuries last up 0.7 basis points to 1.488%.
The latest development in the Evergrande situation is that the problems in the property sector are spreading to other developers. China's Fantasia Holdings missed repaying $206 million on a bond that matured Monday, two weeks after saying it had no liquidity issues.
Evergrande's shares remain suspended in Hong Kong ahead of an announcement of a pending sale of one of its subsidiaries. The embattled developer has still not made an announcement after requesting a trading halt on Monday.
Mainland China remains on holiday. Tokyo's Nikkei fell 2.1% following overnight losses on Wall Street, but Hong Kong's Hang Seng rose 0.2%.
"Hopes that more Evergrande asset sales are in the offing could be lifting sentiment temporarily," Halley said.
From the UK's fuel supply issues and attrition of the Northern Ireland protocol, to the impasse over the US debt ceiling and ongoing concerns over Evergrande, investors across the board are seeing near-term volatility across equities, bonds, and commodities, Joe Tuckey, FX analyst at Argentex, said.
But most European indices showed more resilience, with London's FTSE 100 rising 0.5% and the Euro Stoxx 600 added 0.3%. Frankfurt's DAX rose 0.2%.
OPEC+ seems to have been the biggest cause of volatility, after ignoring calls to pump more oil to cool down prices, leaving their 400,000 barrels-per-day target per month increase unchanged.
The market was positioned for the possibility of a further increase in output, notably after Saudi Aramco CEO Amin Nasser said the lift in nat gas had resulted in a rise in the demand for crude by 500,000 barrels per day, said Pepperstone's Chris Weston.
Brent crude rose 0.2% to $81.72 a barrel and West Texas Intermediate was about flat at $77.61 a barrel.