By Geoffrey Smith
Investing.com -- The dollar rose and gold fell as bond yields hit new highs ahead of President Joe Biden's big speech on infrastructure spending plans on Wednesday. The Centers for Disease Control's new head confessed a sense of "impending doom" as U.S. Covid-19 infections and hospital admissions start to rise again. Cathie Wood's new space-themed ETF launches, with some odd-looking holdings. Lululemon reports earnings, and Amazon's experiment with food delivery goes public in the U.K. in underwhelming fashion. Here's what you need to know in financial markets on Tuesday, March 30th.
1. Dollar firms as yields rise
U.S. Treasury bond yields rose, pulling the dollar higher and gold futures lower as markets braced for the announcement of President Joe Biden’s infrastructure spending plans in a speech on Wednesday.
The dollar hit its highest in over a year against the yen and its highest in 4 ½ months against the euro, as bets on the global economic recovery were trimmed against a backdrop of rising Covid-19 cases worldwide.
By 6:30 AM ET (1130 GMT), the dollar index that tracks the greenback against a basket of developed economy currencies was up 0.2% at 93.112 just off a high of 93.192 that was its highest since Pfizer (NYSE:PFE) and BioNTech announced their vaccine breakthrough in November.
The yield on the 10 year Treasury note rose to 1.77%, its highest since the start of the pandemic, while the 30 year yield rose to 2.46%. The impact of rising bond yields and mortgage rates may be reflected in house price and consumer confidence data later Tuesday. Gold fell back below $1,700 to test a three-month low.
2. Vaccines battle "impending doom"
The U.S. could fall victim to a fourth wave of Covid-19 if it reopens its economy too quickly, Rochelle Walensky, the new head of the Centers for Disease Control and Prevention, warned on Monday.
Walensky said the incidence of new infections and hospitalizations has turned upward in recent days, giving her a sense of “impending doom” in the light of what has happened in Europe over the last month.
There was more upbeat news from a CDC study that showed that the mRNA-based vaccines produced by Pfizer/BioNTech and Moderna (NASDAQ:MRNA) stop 90% of transmission of Covid-19, and are not only effective in stopping infection. The results suggest that the vaccines should effectively mitigate the risks of public gatherings of vaccinated people.
President Biden said on Monday that 90% of U.S. adults would be eligible for vaccination by April 19.
3. Stocks set to open mixed; banks face SEC wrath after Archegos; Lululemon eyed
U.S. stock futures are mixed ahead of the opening of cash markets later, with the rise in bond yields weighing on tech futures in particular.
By 6:30 AM ET (1130 GMT), Dow Jones futures were up 75 points, or 0.2%, but the S&P 500 futures contract was flat and the Nasdaq 100 futures contract was down 0.5%.
Stocks likely to be in focus later include Goldman Sachs (NYSE:GS) and Morgan Stanley (NYSE:MS), which may have avoided substantial losses in liquidating the Archegos portfolio, but may face awkward questions from the SEC in how they helped Archegos get round rules forcing the disclosure of major positions.
Also in the spotlight will be Lululemon (NASDAQ:LULU), which reports earnings before the open, and Canoo (NASDAQ:GOEV), whose investor call late on Monday hinted that its partnership deal with Hyundai is dead. The electric vehicle maker also said on Monday that its chief financial officer Paul Balciunas has left.
4. ARK's Space ETF Launches
After all the ballyhoo, Cathie Wood’s new space-themed exchange-traded fund launches on Tuesday.
The actively-managed ARK Space Exploration ETF (ARKX) will boast 39 individual holdings to start with. The second-largest of these, with a weight of 6.1%, will be ARK’s own 3D Printing ETF (NYSE:PRNT), which has fallen some 22% from its peak in the last two months.
Another 9% is accounted for by Chinese e-commerce company JD.com (NASDAQ:JD) and Japanese heavy machinery maker Komatsu (OTC:KMTUY). Netflix (NASDAQ:NFLX) and Google parent Alphabet (NASDAQ:GOOGL) are also among the holdings, as is Virgin Galactic (NYSE:SPCE), which has a weighting of just under 2%.
The ETF is listing ahead of a wave of space-themed IPOs later in the year.
5. Amazon's U.K. experiment on food delivery goes public
Europe’s biggest IPO so far this year is fizzling. Deliveroo, the food delivery startup backed by Amazon (NASDAQ:AMZN), priced its offering at the bottom of the marketing range, valuing it at 7.6 billion pounds ($10.5 billion).
The offering has been overshadowed by the refusal of a number of high-profile institutional investors, including Aviva (LON:AV), Standard Life (LON:SLA) and Legal & General (LON:LGEN) to invest due to concerns about its business model, specifically with regard to its pay practices.
As with many companies in the delivery sector, Deliveroo is not yet profitable, and the regulatory outlook has darkened since the U.K. Supreme Court ordered Uber (NYSE:UBER) to treat its gig-worker drivers as employees rather than contractors.
Amazon, which owns just under 20% of Deliveroo, faces its own labor relations challenge later with a vote on unionization by its warehouse workforce in Alabama. The vote is seen as possibly setting a nationwide precedent.