Futures on the Nasdaq 100 equity index ticked higher on Monday, seeking to build on last week’s gain as US Treasury yields retreated further from recent highs and China’s modest new economic growth target appeared to rule out a fresh global inflation spike.
(Bloomberg) — Futures on the Nasdaq 100 equity index ticked higher on Monday, seeking to build on last week’s gain as US Treasury yields retreated further from recent highs and China’s modest new economic growth target appeared to rule out a fresh global inflation spike.
Contracts on the interest rate-sensitive Nasdaq climbed 0.3% after the underlying index enjoyed its best day in a month on Friday, while those on the S&P 500 also turned positive, after snapping a three-week losing streak. Gains were tentative, however, as Chinese leaders set a lower-than-expected 5% economic growth goal, which implies Beijing is unlikely to deploy large-scale stimulus to shore up its Covid-ravaged economy.
Commodity and energy shares, in particular, felt the heat from Beijing’s lacklustre growth outlook, keeping Europe’s Stoxx equity benchmark flat.
Some analysts saw China’s target as positive if it prevents another bout of global price growth as the world’s No. 2 economy accelerates. Prices for iron ore, crude oil and copper fell, knocking a Bloomberg index of commodities as much as 1% lower. US crude futures slipped after gaining more than 4% last week.
“The inflation impulse may not be as extreme for the global economy,” Christian Mueller-Glissmann, head of asset allocation research at Goldman Sachs Group Inc., told Bloomberg Television. “Our biggest concern coming into this reopening was oil. A significant increase in oil prices would make the job for the Federal Reserve even more difficult.”
US 10-year Treasury yields have retreated from the psychologically key 4% mark and are currently around 3.91%, more than 10 basis points below levels seen last week. Euro-zone yields also fell as investors trimmed wagers on peak interest rates in the bloc.
Friday’s Wall Street gains were driven by data showing service providers’ costs growing more slowly. Labor markets remain robust however, meaning February’s payrolls data, due at the end of this week, will be crucial after the previous month’s stronger-than-expected figures.
Traders are also waiting to see if Fed Chair Jerome Powell’s testimony to the Senate and House committees echoes recent hawkish comments from other rate-setters. But conviction is growing that the Fed’s interest rate rises will not go beyond the 5.4% or so that’s already priced. A 25 basis-point rate rise is expected for the Fed’s March 21-22 meeting, with an outside chance of a 50 basis-point move.
“Powell could surprise markets this week with his testimony but they have already set it up so they hike in 25 basis-point increments,” Nikko Asset Management chief strategist John Vail said on Bloomberg Television.
Vail predicted payrolls data to show a softer figure than the previous month, “and that may calm down some of the fears of the Fed.”
Elsewhere in currency markets, the dollar gained after slipping 0.8% last week
In US premarket trading, shares in Apple rose 1.6% as Goldman Sachs recommended buying them for the first time in nearly six years and the iPhone maker geared up to launch its next slate of laptops and desktops
Key events this week:
- US factory orders, durable goods, Monday
- US wholesale inventories, consumer credit, Tuesday
- Fed Powell’s semiannual Monetary Policy Report to the Senate Banking Committee, Tuesday
- Australia rate decision, Tuesday
- Euro area GDP, Wednesday
- US MBA mortgage applications, ADP employment change, trade balance, JOLTS job openings, Wednesday
- Fed Chair Powell’s semiannual Monetary Policy Report to the House Financial Services Committee, Wednesday
- Canada rate decision, Wednesday
- EIA crude oil inventories, Wednesday
- China CPI, PPI, Thursday
- US Challenger job cuts, initial jobless claims, household change in net worth, Thursday
- Bank of Japan policy rate decision, Friday
- US nonfarm payrolls, unemployment rate, monthly budget statement, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures rose 0.1% as of 8:22 a.m. New York time
- Nasdaq 100 futures rose 0.3%
- Futures on the Dow Jones Industrial Average were little changed
- The Stoxx Europe 600 was little changed
- The MSCI World index rose 0.2%
- S&P 500 futures rose 0.1%
- Nasdaq 100 futures rose 0.3%
- The MSCI Asia Pacific Index rose 0.8%
- The MSCI Emerging Markets Index rose 0.6%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro rose 0.1% to $1.0648
- The British pound fell 0.2% to $1.2016
- The Japanese yen was little changed at 135.82 per dollar
- The offshore yuan fell 0.6% to 6.9402 per dollar
Cryptocurrencies
- Bitcoin fell 0.4% to $22,394.05
- Ether fell 0.5% to $1,564.99
Bonds
- The yield on 10-year Treasuries declined five basis points to 3.90%
- Germany’s 10-year yield declined six basis points to 2.65%
- Britain’s 10-year yield declined six basis points to 3.79%
Commodities
- West Texas Intermediate crude fell 1.3% to $78.65 a barrel
- Gold futures rose 0.2% to $1,857.60 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Brett Miller.
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