Stocks are off to a mixed start on Wall Street as gains for several big technology companies offset losses in banks and other parts of the market. The S&P 500 was up 0.1% in the early going Monday. The benchmark index is coming off its first weekly loss in three weeks. The Dow fell 0.2% and the Nasdaq rose 0.6%. Railroad operator Kansas City Southern soared 25% after agreeing to be acquired by Canadian Pacific for $25 billion. AstraZeneca rose after final-stage testing in the U.S. found that its coronavirus vaccine provided strong protection against sickness. Treasury yields fell.
Global shares were mostly lower Monday after the U.S. Federal Reserve’s announcement that it would end some emergency measures put in place last year to help the financial industry weather the pandemic.
France’s CAC 40 shed 0.6% in early trading to 5,960.20, while Germany’s DAX was little changed but inched up less than 0.1% to 14,622.59. Britain’s FTSE 100 dipped 0.4% to 6,681.90. U.S. shares were set to drift lower with Dow futures down 0.3% at 32,413. S&P 500 futures fell nearly 0.1% to 3,897.75.
The Turkish lira nosedived early Monday, falling about 17%, after the country’s president, Recep Tayyip Erdogan, removed central bank head Naci Agbal from his post on Saturday. The currency was trading at about 7.8 lira to the dollar on Monday morning.
Agbal had been struggling to counter inflation by raising interest rates, while Erdogan contended that raising interest rates would contribute to inflation — contrary to economic experience and theory, Jeffrey Halley of Oanda said in a commentary. He replaced Agbal with a banking professor who has argued for lower interest rates.
The central bank had said tight monetary policy would be maintained until inflation, which has hit 15.61%, was brought under control. An increase in the key interest rate by 200 basis points to 19% last week had pushed the lira higher.
“Turkey will be an interesting example of what emerging markets can expect if inflation fears rise markedly,” Halley said.
In Asian trading, Japan’s benchmark Nikkei 225 dropped 2.1% to 29,174.15. South Korea’s Kospi lost 0.1% to 3,035.46. Australia’s S&P/ASX 200 gained 0.7% to 6,752.50. Hong Kong’s Hang Seng shed 0.4% to 28,885.34, while the Shanghai Composite jumped 1.1% to 3,443.44.
Major Japanese stocks fell nearly across the board, including automakers like Toyota Motor Corp. and Honda Motor Co., whose earnings get a boost from a healthy U.S. economy. Toyota’s shares fell 3.3% while Honda’s lost 3.6%.
“Asia markets had seen a mixed commencement to the week with the rising bond yields once again weighing on sentiment. The see-sawing of the influence between rising bond yields and improving economic recovery prospect may well remain for the region going into the end of March,” said Jingyi Pan, senior market strategist at IG in Singapore.
The move last week by the Fed will restore some of the capital requirements for big banks that were suspended in the early months of the viral outbreak, in order to give banks flexibility. The banking industry had hoped those measures would be extended.
But most of the Fed’s policies aimed at supporting the recovery from the pandemic remain intact.
Worries about the coronavirus pandemic remain in the region, where vaccine rollouts in some nations such as Japan and Thailand are progressing slowly compared to the U.S. or Europe. Nonetheless, in Japan a “state of emergency” is being lifted this week in the Tokyo area,
As interest rates have risen, pricier stocks like technology companies have fallen. The prospect of higher interest rates as bond yields rise has some investors concerned that economic growth could slow. There are also concerns that the rise in bond yields could be a harbinger of inflation.
In energy trading, benchmark U.S. crude fell 56 cents to $60.86 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the international standard lost 44 cents to $64.09 a barrel.
In currency trading, the U.S. dollar inched up to 108.69 Japanese yen from 108.65 yen. The euro cost $1.1898, up from $1.1880.