US futures point higher after Thursday's sell-off, but bond yields continue to worry some investors

Brendan McDermid/ReutersUS stocks have had a subdued week after a strong start to February.

US stock futures pointed to a higher open on Friday after a week in which equities struggled for direction as bond yields rose, increasing borrowing costs and worrying some investors.

Yields on longer-dated US bonds climbed overnight and traded at around their highest level since February 2020, before the coronavirus pandemic took hold.

S&P 500 futures rose 0.31% on Friday morning, after the benchmark index fell 0.44% on Thursday. Nasdaq futures climbed 0.37% and Dow Jones futures were up 0.25% after both indexes fell the previous day.

Stocks were mixed in Asia overnight, with China’s CSI 300 gaining 0.18% but Japan’s Nikkei 225 slipping 0.72%.

The European Stoxx 600 index was up 0.2% in morning trading while the UK’s FTSE 100 was just 0.02% higher. The British pound topped $US1.40 ($2) for the first time since 2018, as investors cheered the UK’s fast vaccination drive.

Equities have had a subdued week after jumping in early February. Lawmakers continue to debate a possible $US1.9 ($2) trillion stimulus package in the US and chew over economic data.

On Thursday, data showed US jobless claims rose more than expected to 861,000 the previous week, contrasting with stronger-than-predicted retail sales figures from the day earlier.

A sharp rise in bond yields has also weighed on stocks. When returns on bonds rise, the safe assets became more attractive to investors.

The yield on the 10-year US Treasury note, which moves inversely to the price, rose 1.9 basis points to 1.306% on Friday morning. That was near a one-year high of 1.33% touched on Wednesday.

“A resumption of the surge in global bond yields is starting to worry some traders,” said Edward Moya, senior market analyst at currency firm Oanda.

“Despite a firm Fed commitment that monetary policy will remain supportive and additional fiscal spending from the Biden administration, US stocks are ripe for a pullback if yields continue to go up.”

Nonetheless, the US stock rally has shown little sign of slowing down significantly yet. The S&P 500 is up around 4% in 2021 and 15% over the last 6 months.

The bitcoin price rose to an all-time high of above $US52,800 ($67,180) on Friday as investors continued to pile into the cryptocurrency. Its year-to-date gain is now around 80%.

WTI crude oil slipped back from a roughly 14-month high caused by freeing temperatures battering Texas. It was down 1.57% on Friday morning to $US59.56 ($76) a barrel. Brent crude was 1.13% lower at $US63.20 ($80) a barrel.

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