Stocks stumble after 10Y yields hit 3%

Climbing US treasury yields have raised fears of a tightening environment for the economy and a shift out of stock markets. Meanwhile, the US earnings calendar steps up, with Facebook likely to grab the headlines.

• US-led selloff drags Asia and Europe lower

• Rise in treasury yields heightens fear of a rotation out of stocks

• US earnings in focus as Facebook investors hope for a rebound

A US-led selloff has seen Asian and European markets trading in the red, as a rise in US treasury yields helps drive uncertainty over a potential shift out of stocks. One of the benefits of the incessant fall in interest rates has been a continued shift towards stock markets, which became the only game in town. However, with US 10-year treasury yields topping 3% for the first time since 2014, fears have been stoked over whether we will see investors shift assets out of stocks and into bonds. Alongside the impact on investor asset allocation, there is also a fear that we will see the rise in borrowing costs impact highly leveraged companies and households.

Today sees a focus on the US earnings picture, with a host of firms across tech, telecoms, and manufacturing all reporting their Q1 figures. Coming off the back of the recent testimony from Mark Zuckerburg, investors will be carefully watching for a potential rebound, with the main man himself recently noting that their site saw very few users leave the platform in response to the Cambridge Analytics privacy story. Recent earnings releases have been treated with disdain as sky high expectations mean that even a firm with outperformance across much of the business could end up seeing their share price suffer as investors focus on the negatives (such as we saw with Caterpillar yesterday).

Ahead of the open we expect the Dow Jones to open 43 points lower, at 23,946.