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The Monday Market Minute

  • Global stocks slide as investors retreat to safe-haven assets amid a brewing currency crisis in Turkey and the prospect of a delay COVID reopening in Europe.
  • Turkey President Recep Tayyip Erdogan fires central bank head following last week’s rate hike, sending the lira to a near record low against the U.S. dollar.
  • Safe-have flows see benchmark 10-year note yields slip to 1.679% while the dollar index rises 0.05% to 91.951 against a basket of its global currency peers.
  • CDC data shows 44.1 million Americans have now been fully vaccinated against the coronavirus, with more than 124.4 million doses administered as of Sunday.
  • AstraZeneca publishes details of its north American vaccine trial that indicate 79% efficacy, potentially paving the way towards emergency use approval from the FDA.
  • U.S. equity futures suggest a mixed open on Wall Street heading into an active week for bond markets with three benchmark auctions and joint testimony from Fed Chair Jerome Powell and Treasury Secretary Janet Yellen before Congress on Tuesday.

U.S. equity futures traded lower Monday, although tech stocks look set to open modestly higher amid a pullback in Treasury bond yields, as global markets retreated amid Europe’s stalled pandemic recovery and a brewing currency crisis in Turkey. 

President Recep Tayyip Erdogan fired the country’s central bank chief, Naci Agba, over the weekend, just days after he had approved an sharp interest rate hike designed to blunt the impact of inflation in the struggling economy. The move sent the Turkish lira down 15% against the U.S. dollar, the steepest decline in nearly three years, and triggered a rush to safe-have assets in Europe and elsewhere.

The moves lifted the greenback against a basket of its global currency peers and pulled U.S. Treasury bond yields lower, with benchmark 10-year notes trading at 1.68% in early European dealing.

Set against Europe’s myriad issues with vaccine safety, business and travel restrictions and rising infections, the crisis in Turkey could add to market volatility in the days ahead even as the U.S. continues to show signs of a powerful post-pandemic recovery and a coronavirus vaccination rate of more than 2 million per day.

A weekend takeover of Kansas City Southern  (KSU) – Get Report by Canadian Pacific Railways  (CP) – Get Report, worth nearly $30 billion including debt, also indicates significant turnaround optimism following last week’s Federal Reserve pledge to keep interest rates at record lows and continue supporting the bond market. 

Still, the overnight moves in Europe and Asia have pulled Wall Street futures into the red, with contracts tied to the Dow Jones Industrial Average indicating a 110 point opening bell decline and those linked to the S&P 500 priced for a 7 point pullback.

Nasdaq Composite futures, however, look set for a modest 55 point gain thanks in part to falling Treasury yields and pre-market gains for Apple  (AAPL) – Get Report and Tesla  (TSLA) – Get Report, the latter of which benefiting from a bullish long-term outlook from ARK Innovation ETF  (ARKK) – Get Report founder Cathie Wood. 

AstraZeneca Plc  (AZN) – Get Report shares were a notable pre-market mover, as well, rising 1.3% after the U.K.-based drugmaker published details of a major north American trial of its Oxford University-developed Coronavirus vaccine that indicated a 79% efficacy and 100% protection against severe forms of the disease and deaths.

Oil prices were also in the red, with traders citing the likely delay in Europe’s re-opening schedule as well as the stronger U.S. dollar, with WTI contracts for May delivery — the new benchmark futures contract — falling 45 cents to $60.99 per barrel and Brent contracts down 36 cents at $64.17 per barrel.

European stocks, in fact, fell to a near two-week low Monday, with the Stoxx 600 down 0.25% in Frankfurt and Britain’s FTSE 100 down 0.44% in early trading.

Overnight in Asia, Japan’s Nikkei 225 fell 2.07% to close at 29,174.15 points as carmakers Toyota TM, Nissan and Honda  (HMC) – Get Report fell sharply following news of a fire at a Renesas Electronics plant in northern Japan that destroyed millions of dollars in inventory and could exacerbate the global semiconductor shortage in the coming week.