Technology stocks were in focus yesterday at the start of a big week of earnings for the sector globally, while bond yields hit multi-year highs as investors braced for major central banks to step back from ultra-easy monetary policies.
The MSCI’s global information technology sector index hit a record high but retreated after a report that Apple had reduced production targets for its iPhone X. That dented share prices of a number of European companies in its supply chain, leaving the sector flat on the day.
The early gains were fuelled by Swiss chipmaker AMS, a key Apple supplier, which reported a doubling of annual revenue and upgraded earnings guidance ahead of expectations.
Futures pointed to the US tech-focused NASDAQ opening 0.3 per cent lower, with the Dow Jones and S&P 500 down by similar amounts after notching their best four-week run since 2016 on Friday.
European tech stocks continued to outperform, up 0.5 per cent against a fall of 0.1 per cent for the pan-European Stoxx 600 index.
“Technology stocks have been at the forefront of equity market gains, and this week are pivotal for keeping the momentum going,” said Rebecca O’Keeffe, head of investment at Interactive Investor.
US technology heavyweights Apple, Alphabet, Facebook, Micro-soft and Amazon are all due to report earnings this week.
US and European bond yields reached milestones as investors prepare for central banks to tighten monetary policy, with a European Central Bank policymaker having said the ECB should spell out that it would end its bond purchases this year.
“There is no reason whatsoever to continue the programme,” Dutch central bank chief Klaas Knot said on Sunday.
There was a rise in borrowing costs for Germany, the eurozone’s biggest economy, with the five-year bond yield briefly turning positive for the first time since 2015 to reach a high of 0.013 per cent. It was last trading at zero.
The 10-year Treasury yield rose to 2.724 per cent, its highest since early 2014. Two-year Treasury yields rose to 2.161 per cent, their highest since 2008.
Helped by rising bond yields, the dollar edged higher against a basket of currencies, rising 0.3 per cent to 89.37 after six consecutive weeks of losses.
Conflicting signals from top US officials last week did little to discourage bearish positions, with net short dollar bets increasing to their highest level since October, latest positioning data showed.
Despite yesterday’s rise the dollar is set to post its biggest mon-thly decline since March 2016.
The currency’s decline has been a boon for many commodities, with gold reaching a 17-month peak last week and last trading at $1,341 an ounce.
Oil prices dipped yesterday but remained set for their best January in five years.