U.S. Equity Futures Up as Earnings Help Sentiment: Markets Wrap
(Bloomberg) -- U.S. equity futures rose and Asian stocks were steady Tuesday after a record S&P 500 close as corporate earnings and progress on President Joe Biden’s economic agenda helped sentiment even as the debate over inflation risks intensified.
Japanese equities outperformed while China and Hong Kong slipped. Traders digested incremental progress in U.S.-China economic and trade talks in the shape of a second call in about four months between Vice Premier Liu He and Treasury Secretary Janet Yellen. The yen fell amid easing demand for havens.
U.S. futures advanced, with Nasdaq 100 contracts outperforming. The tech-heavy gauge led U.S. gains overnight amid a Tesla Inc. rally to a $1 trillion market value. Facebook Inc. was higher in late trading on strong user growth and a pledge to buy back as much as $50 billion more in stock.
The 10-year U.S. Treasury yield and the dollar edged up. The debate over price pressures continues: former Treasury Secretary Lawrence Summers said officials are unlikely to deal with “inflation reality” successfully until it’s fully recognized.
Earnings season is helping to counter concerns that elevated inflation and tightening monetary policy will slow the recovery from the pandemic. Some 81% of S&P 500 members have reported better-than-expected earnings so far.
Equity markets are “continuing their recovery and we expect this process to continue past big tech earnings” and this week’s European Central Bank meeting, where policy makers may flag the end to their pandemic bond-buying program, Sebastien Galy, senior macro strategist at Nordea Investment Funds, wrote in a note.
In China, Modern Land China Co. became the latest builder to miss a payment on a dollar bond, in a further sign of stress in the nation’s real estate sector. Defaults from Chinese borrowers on offshore bonds have jumped to a record.
Meanwhile, U.S. Democrats stepped closer to an agreement on Biden’s multi-trillion dollar economic agenda. That could allow the House this week to pass a $550 billion infrastructure bill.
Crude oil was little changed around $84 a barrel as investors weighed the outlook for U.S. stockpiles and prospects for talks that may eventually help to revive an Iranian nuclear accord, allowing a pickup in crude exports.
Gold held above $1,800 an ounce and Bitcoin traded around $62,500.
Here are some events to watch this week:
- Earnings: Amazon, Apple, Microsoft, Twitter, Samsung Electronics, China Vanke, PetroChina, Ping An Insurance Group
- Australia CPI, Wednesday
- U.S. wholesale inventories, U.S. durable goods, Wednesday
- Bank of Japan monetary policy decision, briefing, Thursday
- ECB rates decision, President Christine Lagarde briefing, Thursday
- U.S. GDP, initial jobless claims, Thursday
- G-20 joint finance and health ministers meeting ahead of the weekend leaders’ summit, Friday
For more market analysis, read our MLIV blog.
Some of the main moves in markets:
Stocks
- S&P 500 futures climbed 0.2% as of 6:56 a.m. in London. The S&P 500 rose 0.5%
- Nasdaq 100 futures rose 0.5%. The Nasdaq 100 rose 1%
- Japan’s Topix index rose 1.1%
- Australia’s S&P/ASX 200 Index was little changed
- South Korea’s Kospi index gained 1%
- Hong Kong’s Hang Seng Index shed 0.7%
- China’s Shanghai Composite Index dropped 0.3%
- Euro Stoxx 50 futures were flat
Currencies
- The Japanese yen was at 113.94 per dollar, down 0.2%
- The offshore yuan traded at 6.3814 per dollar
- The Bloomberg Dollar Spot Index rose 0.1%
- The euro was at $1.1601
Bonds
- The yield on 10-year Treasuries rose one basis point to 1.64%
- Australia’s 10-year bond yield rose two basis points to 1.81%
Commodities
- West Texas Intermediate crude was at $83.65 a barrel, down 0.1%
- Gold was at $1,803.48 an ounce, dropping 0.2%
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