LIVE MARKETS-Earnings momentum for the S&P

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EARNINGS MOMENTUM FOR THE S&P (1015 GMT)

The U.S. are expected to offset the adverse impact of rising yields with a strong recovery coupled with expansion of earnings, which is the main equity key driver.

“Much better than expected earnings should drive further S&P 500 upside through 2021,” UBS analysts say.

"We raise our S&P 500 price target for year end to 4250, from 4100, on higher forecasted EPS of $188 for 2021 and $218 for 2022", they add.

While the Fed's policy will be crucial as higher rates have an impact on stock valuations, politics also have to be closely monitored. More corporate and capital gains taxes coupled with greater regulation would reduce UBS estimates by 12%.

(Stefano Rebaudo)

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EUROPE ON THE BACKFOOT (0837 GMT)

A cocktail of reasons for the pullback in Europe this morning, despite strong sessions in U.S. and Asia overnight. The Stoxx 600 index is however comfortably poised to record a gain for the week.

Concerns about the vaccination campaign, with AstraZeneca

further cutting its supply forecast are dampening risk sentiment.

Then we have yields on the rise above 1.6% in early London trading and China warning the United States to stop interfering in its affairs, including Hong Kong.

The Stoxx 600 index is down 0.3%, with Tech stocks leading losses down 1.2%, inline with Nasdaq futures.

Shares in online investor Prosus are down 4.4%, after China's watchdog imposed administrative penalties on 12 companies including Internet giants Tencent and Baidu for violating anti-monopoly law in 10 deals.

Bank stocks are in positive territory after yesterday’s strong post-ECB selloff.

Burberry is the best performer of Stoxx 600, up 7%, after the company raised its outlook.

(Stefano Rebaudo)

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TROUBLE RETURNS (0811 GMT)

U.S. 10-year Treasury yields are on track to rise for the seventh week straight. But a measure of calm that had returned in recent days seems to have dissipated on Friday as yields are making their way back towards recent one-year highs above 1.6%.

Euro zone yields too are higher this morning, though to a lesser extent, still benefiting from the ECB's promise to accelerate emergency money-printing.

That in turn is putting the dampener on stock markets -- world stocks rose three days in a row as U.S. yields pulled back but are now turning tail -- Nasdaq futures are down 1%. Futures for the S&P500 and for European stocks are also weaker, albeit to a lesser degree.

So what's going on? Jobs data on Thursday indicated the U.S. economy is well on the road to recovery while President Joe Biden signed into law a $1.9 trillion COVID-19 relief bill and a 30-year Treasury auction had a mixed outcome.

That was partly down to dealers offloading Treasuries to hedge a corporate bond deal from Verizon, it nonetheless continues to suggest persistent uncertainty about appetite for U.S. government debt.

And as the risk sentiment sours going into the weekend, the dollar has risen off one-week low against its rivals, slamming currencies such as the euro and Aussie dollar almost half a percent lower. An index of emerging market currencies which on Thursday posted its biggest rise since early-January has fallen back.

But it's not all bad news. The Nasdaq, despite a recent recovery, remains well behind the Dow 30, S&P and Russell 2000 indexes which have hit records -- clearly investors, seeing economic recovery on the horizon, are piling into old economy stocks such as banks and energy.

Key developments that should provide more direction to markets on Friday: -Britain's economy shrank by 2.9% in January from December -Brent oil prices ease but stay near $70 a barrel -British luxury group Burberry raises outlook after strong bounceback in sales; -Apple's market value could breach $3 trillion if the iPhone maker successfully makes Apple Car, Citi says, -Euro area industrial production -Canada employment report

(Saikat Chatterjee)

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EUROPEAN FUTURES TAKE A BREATHER (0633 GMT)

European stock futures are pointing to a session flat or slightly in the red, as equities seem keen on taking a breather after a rally which drove the Stoxx 600 index close to pre-pandemic levels.

Germany’s Dax has been hitting fresh record highs since the start of the week and many Europe’s benchmark sectoral indexes are at their highest levels or close to them.

The bigger picture remains favourable to risk sentiment after the ECB announced an increase of PEPP buying pace to keep a lid on borrowing costs, while subsiding inflation fears boosted Wall Street and Asian stocks overnight.

(Stefano Rebaudo)

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