Stocks, Futures Rise as Earnings Buoy Sentiment: Markets Wrap

(Bloomberg) -- European stocks climbed on Monday along with U.S. index futures as positive corporate earnings and economic data offset lingering concerns over China’s regulatory crackdown and the spread of the delta virus variant.

Carmakers and retailers led the advance in the Stoxx Europe 600 index, which started the month by rising to a record. Earnings beats from the likes of HSBC Holdings Plc, Axa SA and Heineken NV buoyed sentiment, while Meggitt Plc soared more than 60% after agreeing to a takeover bid. The euro edged higher after data showed factories in the common-currency region are hiring new workers at record pace to keep up with persistently strong orders.

S&P 500 and Nasdaq 100 contracts climbed as a $550 billion infrastructure package steps closer to passage in the Senate this week. Treasuries and the dollar dipped. Hong Kong and China stocks rose, paring some of last week’s rout sparked by Beijing’s clampdown on everything from technology to private education and property.

Global stocks in July completed their longest winning streak since 2018, but the pace of gains was the slowest in the six-month winning stretch. Corporate earnings have generally aided equities, while the latest euro-area manufacturing data showed the recovery is on track, though concerns about supply bottlenecks and rising prices remain. Other risks include the impact of the delta virus strain on the world economy, as well as China’s push for more control over some of its major companies.

Recovering Earnings Keep Macro Worries at Bay: Taking Stock

“Shares remain at risk of a short-term correction or volatility as coronavirus cases rise globally, the inflation scare continues and as we come into seasonally weaker months, but surging company profits in the U.S. and lower bond yields are providing support,” Shane Oliver, head of investment strategy and chief economist at AMP Capital, said in a note.

Other manufacturing reports were mixed. Purchasing-manager readings from China implied a steadier recovery ahead, and the nation’s much-watched Politburo meeting on Friday signaled more targeted support for the economy to cushion growth in the face of resurgent pandemic risks.

Elsewhere, Minneapolis Fed President Neel Kashkari said the Covid-19 delta strain could keep some Americans from looking for work, potentially harming the U.S. recovery. The latest updates on U.S. jobs are due later this week.

Crude oil retreated as traders weighed the China outlook and monitored a rise in tensions between Iran and the U.S. Bitcoin slipped back below $40,000, reversing a weekend rally.

Here are some key events to watch this week:

For more market analysis read our MLIV blog.

Here are the main moves in the markets:

Stocks

• The Stoxx Europe 600 rose 0.7% as of 10:35 a.m. London time
• Futures on the S&P 500 advanced 0.6%
• Futures on the Nasdaq 100 gained 0.6%
• Futures on the Dow Jones Industrial Average climbed 0.5%
• The MSCI Asia Pacific Index rose 1.5%
• The MSCI Emerging Markets Index added 1%

Currencies

• The Bloomberg Dollar Spot Index fell 0.2%
• The euro rose 0.1% to $1.1883
• The Japanese yen was little changed at 109.66 per dollar
• The offshore yuan was little changed at 6.4621 per dollar
• The British pound rose 0.1% to $1.3919

Bonds

• The yield on 10-year Treasuries advanced one basis point to 1.23%
• Germany’s 10-year yield advanced two basis points to -0.45%
• Britain’s 10-year yield was little changed at 0.57%

Commodities

• Brent crude fell 1% to $74.65 a barrel
• Spot gold fell 0.3% to $1,808.24 an ounce

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