Stock Rally to Extend on U.S. Economic Optimism: Markets Wrap

Stock Rally to Extend on U.S. Economic Optimism: Markets Wrap
Sunil Jagtiani
·3 min read

(Bloomberg) -- Asian stocks look set to climb Friday after U.S. shares hit a record on a bipartisan $579 billion U.S. infrastructure deal that stoked economic optimism. The dollar held a retreat.

Futures advanced in Japan, Australia and Hong Kong. U.S. contracts were little changed after the S&P 500 and Nasdaq 100 reached new peaks, with sectors seen as beneficiaries of the recovery from the pandemic, such as energy, leading gainers. U.S. banks rose in postmarket trading after clearing stress tests.

President Joe Biden celebrated the bipartisan plan, which is expected to move through Congress alongside a separate bill that would spend trillions more on what he called “human infrastructure.” It’s not yet assured either measure will get enough wider lawmaker support given the political splits in the U.S.

The benchmark 10-year U.S. Treasury yield was little changed after climbing over the week. Investors took the latest comments from Federal Reserve officials in their stride, after the central bank reassured on supportive policy while signaling that exceptional stimulus is set to be trimmed gradually.

An MSCI Inc. gauge of global stocks is on course for its best week since April, underpinned by the economic reopening from the health crisis. Risks such as faster inflation, the prospect of tighter monetary policy and more infectious coronavirus variants have yet to sap sentiment materially.

“Infrastructure spending strengthens an already very strong economic growth outlook,” said Jeff Buchbinder, equity strategist at LPL Financial. Those investments will “bolster the outlook for corporate profits and should keep this bull market going strong well beyond 2021.”

The Mexican peso rallied, spurred by an unexpected central bank interest-rate increase. But the Bank of England pushed back against speculation that a surge in U.K. inflation heralds higher borrowing costs. The pound held a retreat.

West Texas Intermediate crude oil stayed above $73 a barrel. Traders are awaiting upcoming deliberations among OPEC+ producers that may lead to a supply hike. Bitcoin extended a rebound from a swoon earlier in the week.

For more market commentary, follow the MLIV blog.

Here are some events to watch this week:

U.S. personal income/spending, University of Michigan sentiment on Friday

These are some of the main moves in markets:

Stocks

S&P 500 futures edged up 0.1% as of 7:48 a.m. in Tokyo. The index rose 0.6%.Nasdaq 100 futures were flat. The gauge rose 0.6%Nikkei 225 futures were up 0.7%S&P/ASX 200 futures rose 0.7%Hang Seng futures increased 0.3%

Currencies

The Bloomberg Dollar Spot Index was little changed after falling 0.2%The euro was little changed at $1.1932The Japanese yen was at 110.87 per dollarThe offshore yuan was at 6.4707 per dollar

Bonds

The yield on 10-year Treasuries was little changed at 1.49%

Commodities

West Texas Intermediate crude was at $73.21 a barrelGold was at $1,776.42 an ounce

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