LIVE MARKETS Tech trouble - Reuters

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European stock futures down 0.3%
Bond selloff continues ahead of Fed meeting
Nasdaq futures down 1% after long weekend

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TECH TROUBLE (0754 GMT)

Nasdaq futures are down almost 1% on Tuesday, making it likely the tech-heavy index will add to its year-to-date losses of around 4.5%. Having risen for 12 of the past 13 years, it is under heavy pressure from the prospect of higher interest rates and bond yields, more so than the broader S&P 500 index or MSCI's global equity benchmark.

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The 4.5% loss masks deeper falls -- 29 shares have lost 10% or more already this year, according to Capital Economics.

Nasdaq futures positioning has shifted dramatically short, Citi analysts point out, noting that $2 billion worth of remaining long positions are deep in the red.

Those investors will be looking nervously towards bond markets, where two-year U.S. Treasury borrowing costs have risen above 1% for the first time since Feb. 2020. In Europe, German 10-year yields are close to bursting above 0% for the first time since mid-2019.

Inflation is front and centre, as crude oil prices hit seven-year prices. That's good news for some -- the Bank of Japan signalled earlier the country was finally emerging sustainably out of deflation -- but the bond selloff is setting the stage for a dismal stock market session; most Asian bourses fell and Europe looks set to open weaker.

All eyes on central banks now. The U.S. Federal Reserve is now more or less priced to start lifting interest rates from March, Canada could move as early as next week while Britain's forecast-beating labour data on Tuesday, makes it all but certain the Bank of England's Feb 2 meeting will yield a hike.

Nasdaq

Key developments that should provide more direction to markets on Tuesday:

-BOJ raises price outlook but maintains ultra-easy policy read more

-UK employers add record number of jobs read more

-Brent climbs to more than 7-year high on Mideast tensions, tight supply read more

-EU finance ministers meeting on minimum corporate tax, recovery fund, EU budget

-ECB Vice President Luis de Guindos speaks

-Bank of France governor Francois Villeroy de Galhau speaks

-Riksbank Governor Stefan Ingves speaks

-German ZEW

-U.S. earnings: BNY Mellon, Goldman Sachs, Charles Schwab

(Sujata Rao)

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EUROPE SET TO FALL AS BUND YIELDS MARCH TOWARDS ZERO (0745 GMT)

With bonds selling off and 10-year German yields marching towards zero, equities are struggling globally, as traders bet the Fed could tighten policy faster to tame inflation.

So, after losses in Asia, European stocks look set to follow with stock index futures down around 0.3%, while U.S. futures pointed to heavy losses for tech stocks later on.

Also in Europe investors will be watching the tech (.SX8P) space, a sector that has flourished thanks to abundant central bank stimulus boosting valuations, and the COVID-19 pandemic.

Oil meantime is continuing its rally with Brent crude now at a 7-year high, which could possibly help energy stocks further.

(Danilo Masoni)

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