U.S. Futures Jump With Stocks; Dollar, Bonds Drop: Markets Wrap
(Bloomberg) — U.S. stock futures rose with global equities on Tuesday as further moves to ease coronavirus lockdowns in major economies outweighed concerns over escalating geopolitical tensions. The dollar declined for a second straight session.
Contracts on the three main U.S. equity benchmarks rallied from Friday’s close, with S&P 500 futures topping 3,000. Merck & Co. rose in pre-market trading after it unveiled development plans on both a treatment for Covid-19 and a vaccine against it. The Stoxx Europe 600 Index jumped, with travel stocks surging on reports that Berlin plans to lift travel warnings for 31 European countries. The U.K. also announced steps toward getting back to business, sending the pound up by the most in almost a month.
Japan led the equity advance in Asia as the world’s third-largest economy reopened, and shares rose in Hong Kong, which showed signs of stabilizing after weekend unrest. Treasuries slid after the three-day U.S. weekend, alongside Germany’s government debt.
Investors are coming out of the holiday weekend in a risk-on mood, even as tensions between Washington and Beijing continue to flare. China condemned the U.S. for adding 33 Chinese entities to a trade blacklist, but without announcing any retaliatory steps. Meanwhile, Beijing sought to reassure Hong Kong that its judiciary would remain independent under a new national security law.
Cutting against the tensions are mounting signs that coronavirus infection rates are moderating. The Japanese government ended its nationwide state of emergency Monday, while Germany recorded a decline in the number of new virus cases. Signs that more euro area stimulus is on the way is also helping support the appetite for risk.
“The narrative for markets is shifting somewhat, with hopes associated with the easing of lockdown measures in many countries and still very exaggerated hopes of a vaccine being found short-term, needing to be balanced against escalating U.S./China tensions,” said Marc Ostwald, chief economist and global strategist at ADM Investor Services.
Elsewhere, the euro strengthened ahead of negotiations this week on the form of a bloc-wide recovery fund. WTI crude oil advanced to around $34 a barrel on hopes the market may rebalance after historic output cuts.
Here are some key events coming up:
Earnings continue with companies including British Land, Royal Bank of Canada and HP Inc.Thursday brings the U.S. jobless claims reading for the week ended May 23.Federal Reserve Chairman Jerome Powell participates in a virtual discussion on Friday.
These are the main moves in markets:
Stocks
Futures on the S&P 500 Index increased 1.9% as of 7: 19 a.m. New York time.The Stoxx Europe 600 Index climbed 0.9%.The MSCI Asia Pacific Index surged 2%.The MSCI Emerging Market Index rose 1.3%.
Currencies
The Bloomberg Dollar Spot Index dipped 0.7%.The euro increased 0.5% to $1.0956.The British pound jumped 1% to $1.2314.The onshore yuan strengthened 0.1% to 7.133 per dollar.The Japanese yen strengthened 0.1% to 107.56 per dollar.
Bonds
The yield on 10-year Treasuries increased three basis points to 0.69%.The yield on two-year Treasuries increased one basis point to 0.18%.Germany’s 10-year yield increased five basis points to -0.44%.Britain’s 10-year yield gained one basis point to 0.183%.Japan’s 10-year yield rose one basis point to 0.008%.
Commodities
West Texas Intermediate crude gained 2.5% to $34.09 a barrel.Brent crude increased 1.6% to $36.10 a barrel.Gold weakened 0.4% to $1,724.50 an ounce.
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