Biden Drives Yields Up, Tech Reversal, China Fines – What’s up in Markets

President Joe Biden’s address pushes bond yields higher, China’s tech giants sell off after a warning shot from Beijing, and AstraZeneca (NASDAQ:AZN)’s vaccine runs into more problems. Here’s what you need to know in financial markets on Friday, March 12th.

1. Biden signs stimulus package, targets July 4 ‘Independence Day’ from virus

U.S. President Joe Biden signed the $1.9 trillion stimulus package into law, a day earlier than expected, and signaled an acceleration in the national vaccination campaign, targeting a return to normal life in time for the July 4 holiday.

In a televised address, Biden urged states to make all U.S. adults eligible for vaccine shots by May 1, an aim that dovetails with earlier comments about wanting all adults vaccinated by the end of that month.

The comments appeared to solidify faith in a U.S. economic recovery this year, pushing the dollar and U.S. bond yields higher.

By 6:30 AM ET (1130 GMT), the yield on the benchmark 10-Year note was back at 1.61%, its highest since February last year. The dollar index, moving in tandem as usual, rose 0.6% to 91.93, with gains against both commodity currencies and havens such as the Swiss franc .

2. Global stocks, euro tumble

The reversal in Treasury yields undermined the rally in global stocks, pushing both U.S. futures into the red in early trade on Friday. Chinese and Japanese markets escaped the worst of the selling, which started only late on in the Asian session, but Indian and European markets were all lower by 6:30 AM ET.

The EUR/USD has struggled in the last 24 hours on a number of accounts: the European Central Bank’s press conference on Thursday underlined that the yield premium on U.S. assets is likely to widen in the short term, as the ECB steps up its bond purchases. Moreover, most of the EU, with the exception of Spain and Portugal, is now experiencing a clear pickup in Covid-19 cases, casting doubt over the further reopening of the economy.

By 6:30 AM ET, the euro was down 0.5% at $1.1922.

3. Stocks set to open lower; DocuSign, Ulta, Michigan consumer sentiment eyed

U.S. stocks are set to open lower later, but are still on course for a positive week after Biden’s address.

By 6:35 AM, the NASDAQ Futures contract was off its overnight lows but still down 1.5%, after gaining 2.5% on Thursday. The S&P 500 futures contract was down 0.5% and the Dow Jones futures contract was outperforming with a negligible loss of only 13 points.

Stocks likely to be in focus later include Ulta Beauty (NASDAQ:ULTA), which was marked down 10% in premarket trade after publishing disappointing results after the close on Thursday.

DocuSign stock (NASDAQ:DOCU) was also marked down by over 4%, despite beating forecasts both for the last quarter, and for its guidance for the coming quarter.

The data calendar ends the week on a light note, with producer price inflation data due at 8:30 AM ET and the Michigan Consumer Sentiment index at 10 AM.

4 AstraZeneca’s woes; Novavax revels in test results

More countries halted the distribution of AstraZeneca’s Covid-19 vaccine, amid fears that it may be connected to blood-clotting problems that have led to at least one death. Denmark and Austria suspended the use of the drug on Thursday, followed by Norway and Iceland. They’ve now been followed by Estonia, Latvia, Lithuania, Bulgaria and Luxembourg and by Thailand, the first Asian country to do so.

Making matters worse, Reuters reported on Thursday that AstraZeneca’s plans to reduce a shortfall in deliveries to the EU by exporting from the U.S. had been stymied by officials in Washington.

By contrast, Novavax Inc (NASDAQ:NVAX) stock made further gains in premarket after a late-stage trial showed it was 96% effective against the original strain of the Covid-19 virus and 86% effective against the recent ‘British’ strain.

5. Chinese tech hit by regulatory warning shot

Chinese technology giants sold off after antitrust authorities issued a raft of fines relating to their past M&A activity.

The regulators fined Tencent (HK:0700) Holdings (OTC:TCEHY), ride-hailing company Didi Chuxing, search giant Baidu (NASDAQ:BIDU) and Byte Dance, the parent company of TikTok.

The fines, while small in their absolute size, were taken as a warning shot against the companies whose financial clout is reportedly seen by some in Beijing to the authority of the Communist Party. ADRs of Tencent, Baidu and Alibaba (NYSE:BABA), whose founder Jack Ma has also had recent run-ins with regulators in recent months, were all marked down in premarket trading.