Oil rose on Saudi Arabia’s pledge to cut supply. US stock futures fluctuated after last week’s sharp rally, which took the S&P 500 to the brink of a bull market.
(Bloomberg) — Oil rose on Saudi Arabia’s pledge to cut supply. US stock futures fluctuated after last week’s sharp rally, which took the S&P 500 to the brink of a bull market.
Crude futures advanced 2.5%, with oil giants such as Chevron Corp. and Exxon Mobil Corp. up in premarket trading. Saudi Arabia announced it will make an extra 1 million barrel-a-day supply cut in July, taking its production to the lowest level for several years.
Apple Inc. added 0.9% in premarket trading, on track for an all-time high. The company is expected to launch a mixed-reality headset at the Worldwide Developers Conference on Monday, marking its most significant product launch in nearly a decade.
Treasury yields rose across the curve, while the dollar strengthened against all its Group-of-10 peers. There’s increasing speculation that the Federal Reserve plans to keep interest rates steady in June, but keep options open for later hikes. Reports on US services and factory orders due later today may provide further clues on the health of the economy.
“We are in an environment where it makes sense to wait and see,” said Mark Dowding, chief investment officer at BlueBay Asset Management. “What is clear is that there is no abrupt slowing just yet.”
Bets of a pause in Fed rate hikes, along with a Big Tech rally spurred by optimism about artificial intelligence, have put stocks on the verge of a bull market. The S&P 500 on Friday closed just shy of a 20% rise from its October low, while the Cboe Volatility Index fell to the lowest since February 2020. The gauge known as the VIX rose 3.6% on Monday.
The stock rally may come to a halt, hit by a sudden pullback in corporate earnings, Morgan Stanley strategists predict. Their call is at odds with Wall Street estimates.
“We think that the downside risk to US earnings is now,” they wrote in a note published Sunday. “While a deteriorating liquidity backdrop is likely to put downward pressure on equity valuations over the next three months, we also see EPS disappointment ahead as revenue growth slows and margins contract further.”
The strategists are instead bullish on equities in Japan, Taiwan and South Korea.
The Nikkei 225 rose 2.2% on Monday to its highest level since July 1990 as investors bet that the weak yen will boost corporate profits.
Key events this week:
- US factory orders, ISM services, Monday
- ECB President Christine Lagarde appears in European Parliament, Monday
- Rate decisions in Australia, Poland, Tuesday
- China forex reserves, trade, Wednesday
- US trade, consumer credit, Wednesday
- Canada rate decision, Wednesday
- EIA crude oil inventory data, Wednesday
- Eurozone GDP, Thursday
- Rate decisions in India, Peru, Thursday
- Japan GDP, Thursday
- US wholesale inventories, initial jobless claims, Thursday
- China PPI, CPI, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures were little changed as of 8:29 a.m. New York time
- Nasdaq 100 futures fell 0.1%
- Futures on the Dow Jones Industrial Average were little changed
- The Stoxx Europe 600 was little changed
- The MSCI World index was little changed
Currencies
- The Bloomberg Dollar Spot Index rose 0.2%
- The euro fell 0.2% to $1.0684
- The British pound fell 0.6% to $1.2382
- The Japanese yen fell 0.2% to 140.23 per dollar
Cryptocurrencies
- Bitcoin fell 1.9% to $26,740.79
- Ether fell 1.9% to $1,869.08
Bonds
- The yield on 10-year Treasuries advanced five basis points to 3.74%
- Germany’s 10-year yield advanced seven basis points to 2.38%
- Britain’s 10-year yield advanced four basis points to 4.20%
Commodities
- West Texas Intermediate crude rose 2.5% to $73.52 a barrel
- Gold futures fell 0.6% to $1,957.70 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Hooyeon Kim, Tassia Sipahutar and Anchalee Worrachate.
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