US equity futures markets pushed higher, bouncing back from Wall Street’s worst week since December, even as evidence mounted that central bank policy could remain restrictive for longer than thought on both sides of the Atlantic.
(Bloomberg) — US equity futures markets pushed higher, bouncing back from Wall Street’s worst week since December, even as evidence mounted that central bank policy could remain restrictive for longer than thought on both sides of the Atlantic.
Futures on the tech-heavy Nasdaq 100 outperformed as Treasury yields steadied and the dollar turned lower, gaining 0.6%. In the US premarket, Seagen Inc. rose 14% on a report that Pfizer Inc. is in early-stage talks to acquire the cancer therapy developer.
A more optimistic outlook for earnings estimates is helping ease fears that inflation will remain entrenched even as growth slows and enticing investors back to stocks. Those treading into this market risk falling into a “bull trap” according to Michael Wilson, chief US equity strategist at Morgan Stanley. That view was echoed by Torsten Slok, chief economist at Apollo Global Management.
“A generation of investors has since 2008 been taught that they should buy on dips, but today is different because of high inflation, and credit markets and equity markets are underestimating the Fed’s commitment to getting inflation down to 2%,” Slok wrote in a note.
Stock markets that had mostly shrugged off forecasts for higher interest rates are finally giving way to a swift repricing of yields. Traders are now pricing US rates to peak at 5.4% this year, compared with about 5% just a month ago, as an acceleration in the Federal Reserve’s preferred inflation gauge dashes hopes for an imminent pause in policy tightening.
In Europe, German benchmark yields hit 2.58%, the highest since 2011, on bets the European Central Bank will extend its tightening cycle beyond this year. A gauge of the region’s stocks rose more than 1%.
Read more: Bets on ECB Hikes in 2024 Send German Yields to 11-Year High
Elsewhere in markets, oil fell as concerns that the Fed will keep on raising rates eclipsed the latest disruption to supplies in Europe and optimism over a demand recovery in China. Gold was steady.
Key events this week:
- US durable goods, Monday
- US wholesale inventories, Conf. Board consumer confidence, Tuesday
- China manufacturing PMI, non-manufacturing PMI, Caixin manufacturing PMI, Wednesday
- Eurozone S&P Global Eurozone Manufacturing PMI, Wednesday
- US construction spending, ISM Manufacturing, light vehicle sales, Wednesday
- Eurozone CPI, unemployment, Thursday
- US initial jobless claims, Thursday
- Eurozone S&P Global Eurozone Services PMI, PPI, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures rose 0.5% as of 7:37 a.m. New York time
- Nasdaq 100 futures rose 0.6%
- Futures on the Dow Jones Industrial Average rose 0.4%
- The Stoxx Europe 600 rose 1.2%
- The MSCI World index rose 0.2%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro rose 0.1% to $1.0559
- The British pound rose 0.3% to $1.1980
- The Japanese yen rose 0.1% to 136.30 per dollar
Cryptocurrencies
- Bitcoin fell 0.7% to $23,387.26
- Ether fell 0.3% to $1,638.3
Bonds
- The yield on 10-year Treasuries advanced two basis points to 3.96%
- Germany’s 10-year yield advanced four basis points to 2.58%
- Britain’s 10-year yield advanced 14 basis points to 3.80%
Commodities
- West Texas Intermediate crude fell 0.1% to $76.22 a barrel
- Gold futures were little changed
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Akshay Chinchalkar and Richard Henderson.
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