US open: Mixed open on the Street as yields continue to rise

Wall Street trading opened on a slightly mixed note on Monday as Treasury yields continue to rise, with earnings on tap from the likes of Halliburton and Hasbro.

Significantly, and helping to buoy sentiment, at the weekend US Treasury Secretary Steve Mnuchin said he was considering a trip to China, adding that he was "cautiously optimistic" that a deal on trade could be reached.

At 1535 BST, the Dow Jones Industrial Average and S&P 500 were down 0.24% and 0.04%, respectively, while the Nasdaq had picked up 0.13%.

SpreadEx financial analyst Connor Campbell, said, "An indecisive Dow Jones found itself switching between green and red this Monday, the index’s investors unsure what to do with the dollar’s new found energy. Rising US bond yields and their hawkish implications have given the greenback a boot up the backside; the dollar jumped half a percent against both the pound and the euro, while against the Japanese yen it surged 0.8% to hit a near 10-week peak."

US bond yields resumed their push higher amid expectations that the Federal Reserve will lift interest rates, with the yield on the 10-year note trading just under 3% after hitting its highest level since January 2014 on Friday. Markets are now pricing in four interest rate hikes this year versus the three signalled by policymakers.

Konstantinos Anthis, head of research at ADS Securities, said strong earnings results should underpin stocks in the short-term but as yields continue their rally higher traders "should not drop their guard".

"Even a small deterioration in sentiment could trigger a sell-off for global equities as yields threaten the upside potential," he said.

JP Morgan strategist Mislav Matejka was more optimistic, telling clients US and euro area corporate results were set to deliver a surprise in the mid single digits, versus the 9% increase that analysts were forecasting excluding the US administration's tax cuts.

"We expect stocks to keep rebounding, bond yields to move back higher and Cyclicals to lead over Defensives, helped by the likely stabilisation in activity momentum. The Q1 reporting season has started and we believe that it will provide another fundamental support for the market," Matejka said.

On the geopolitical front, North Korea vowed over the weekend to put an end to its nuclear and missile tests. Kim Jong-Un said no further tests were needed as the North had demonstrated that it had nuclear weapons.

Kim, who was due to meet next week with South Korean president Moon Jae-In for the first inter-Korean summit in more than 10 years, said on Saturday: "From 21 April, North Korea will stop nuclear tests and launches of intercontinental ballistic missiles."

On the data front, the Chicago Federal Reserve's national activity index slowed in March from an upwardly revised, multiyear-high reading in February as weaker levels of hiring across a strong job market forced down the broader index.

The Chicago Fed's index came in at a positive 0.10 in March, down from the upwardly revised positive 0.98 in February, the highest mark the volatile index had recorded since the 1.19 it posted all the way back in October 1999.

Elsewhere, factory and service sector activity in the States picked-up noticeably in April, according to the results of two widely-followed surveys, which some economists said pointed towards scope for positive surprises on the growth front in the near-term.

IHS Markit's composite US purchasing managers' index, which combines survey findings for both those sectors, jumped from a reading of 54.2 for March to 54.8 last month.

Within that, the survey compiler's factory sector PMI jumped from 55.6 to 56.5 (consensus: 55.0), reaching a 43-month high and the services sector PMI also strengthened, rising from 54.0 to 54.4 - a two-month high.

According to IHS Markit's Chris Williamson, there was room for "substantial upside surprises" on the US growth front in coming months.

Lastly, US home sales advanced in March thanks to an improved level of activity in the Northeast and Midwest states.

However, a distinct lack of houses on the market and increased prices caused many concerns ahead of the spring selling season, the National Association of Realtors said on Monday.

Existing home sales rose 1.1% to a seasonally adjusted annual rate of 5.6m units in March (consensus: 5.55m), marking the second straight monthly increase in existing home sales, which account for around 90% of all US home sales.

On the corporate front, the technology sector will be in focus this week as earnings are due from Google parent Alphabet, Twitter and Facebook, which was recently hit by the Cambridge Analytica scandal.

Facebook is expected to report first-quarter earnings of $1.36 a share on Wednesday and revenue of $11.41bn.

London Capital Group analyst Jasper Lawler said: "Even if it produces blow out numbers, it will be hard for Facebook to escape the cloud of uncertainty in the short-term."

Consumer products company Kimberly Clark was down 0.23% after lifting its full-year sales forecast ahead of the open.

Hasbro picked up 2.14% after it revealed a $112.5m net loss as a result of Toys R Us' liquidation, while oilfield services giant Halliburton lost 1.35% despite posting a 34% jump in revenue on increased demand across North America.

Alphabet and home appliance manufacturer Whirlpool will report after the close.