(Bloomberg) — U.S. futures fell after health officials recommended a pause in the use of Johnson & Johnson’s Covid-19 vaccine amid safety issues, potentially dealing a blow to efforts to reopen the world’s largest economy.
Contracts on the S&P 500 switched to losses from gains, while small cap futures lost almost 1% following news that the shot was being investigated over rare and severe blood clots. J&J shares fell in premarket trade, while rivals Moderna Inc. and Pfizer Inc. advanced.
European equities briefly fell on the news, before steadying as a rotation into cyclicals as retailers and travel companies tempered declines in utilities and telecom shares.
“This is a setback and it’s going to mark people nervous,” Sebastien Page, a multi-asset strategist at T. Rowe Price, said in an interview on Bloomberg Television. “But the destination is Covid off. We’ve had 100 million doses already so in our portfolios we remain positioned for the recovery trade.”
Bond yields edged higher before consumer-price index numbers due at 8:30 a.m. New York time. Fund managers across the world now see inflation, a taper tantrum and higher taxes as bigger risks than Covid-19, according to the latest Bank of America Corp. survey.
Although policymakers at the Federal Reserve expect a bump in consumer prices to be short-lived, many traders disagree, with fears of faster CPI playing out across duration-heavy assets from bonds to tech stocks.
“A jump in U.S. CPI today is well-flagged, but it should be a wake up call to what we think will be stickier inflation in the coming months, if not years,” strategists at ING Groep NV including Padhraic Garvey wrote in a client note. “This would render the Fed’s position increasingly stretched.”
“Policy-sensitive” five-year securities way be most vulnerable to a deeper selloff, according to the ING strategists. The Treasury plans to auction 30-year bonds Tuesday after sales of three- and 10-year notes attracted decent demand Monday.
Meanwhile, Bitcoin jumped to an all-time high as the mood in cryptocurrencies turned bullish before Coinbase Global Inc. goes public. Oil traded near $60 a barrel.
Some key events to watch this week:
Banks and financial firms begin reporting first-quarter earnings, including JPMorgan Chase & Co., Citigroup Inc., Bank of America Corp., Morgan Stanley, Goldman Sachs Group Inc.Economic Club of Washington hosts Fed Chair Jerome Powell for a moderated Q&A on Wednesday.U.S. Federal Reserve releases Beige Book on Wednesday.U.S. data including initial jobless claims, industrial production and retail sales come Thursday.China economic growth, industrial production and retail sales figures are on Friday.
These are some of the main moves in financial markets:
Stocks
Futures on the S&P 500 Index declined 0.3% as of 7:31 a.m. New York time.The Stoxx Europe 600 Index decreased 0.1%.The MSCI Asia Pacific Index gained 0.1%.The MSCI Emerging Market Index dipped 0.1%.
Currencies
The Bloomberg Dollar Spot Index rose 0.2%.The euro declined 0.2% to $1.1889.The British pound declined 0.1% to $1.3721.The onshore yuan was little changed at 6.549 per dollar.The Japanese yen strengthened 0.1% to 109.30 per dollar.
Bonds
The yield on 10-year Treasuries jumped one basis point to 1.68%.The yield on two-year Treasuries increased less than one basis point to 0.17%.Germany’s 10-year yield rose one basis point to -0.28%.Britain’s 10-year yield gained one basis point to 0.794%.Japan’s 10-year yield decreased less than one basis point to 0.107%.
Commodities
West Texas Intermediate crude increased 0.4% to $59.95 a barrel.Brent crude gained 0.6% to $63.63 a barrel.Gold weakened 0.3% to $1,728.02 an ounce.
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