US equity futures advanced as investors focused on signs of a Chinese economic bounceback and looked past patchy company earnings, including a disappointing report from Goldman Sachs Group Inc.
(Bloomberg) — US equity futures advanced as investors focused on signs of a Chinese economic bounceback and looked past patchy company earnings, including a disappointing report from Goldman Sachs Group Inc.
Contracts on the S&P 500 rose 0.4% on Tuesday, while while those on the tech-heavy Nasdaq 100 traded up as much as 0.7%. Goldman’s revenue fell short of analysts’ estimates, knocking its shares almost 4% lower in premarket trading. US bank shares remained in the green as Bank of America Corp advanced after a trading revenue jump that helped its first-quarter profit beat estimates.
China’s better-than-predicted economic growth has offset global concerns about weak earnings and a possible recession, even as its industrial production came in slower than expected. The first-quarter earnings season is expected to be the worst since the pandemic began three years ago and estimates for coming quarters are falling. In the US, investors are concerned about the impact of March’s large deposit outflows on smaller regional banks.
Recession fears have pushed investors’ allocation of equities versus bonds to the lowest since 2009, according to Bank of America Corp.’s global fund manager survey.
Stocks kept gains after US data showed housing starts fell in March.
Goldman’s fixed-income trading revenue declined 17%, the firm said in a statement Tuesday, leaving Goldman the only major Wall Street bank so far to have posted a drop for that business.
“This is a very messy report with a ton of moving pieces,” Vital Knowledge’s Adam Crisafulli said. “The knee-jerk reaction is negative as the results aren’t nearly as healthy or clean as has been the case with other money centers.”
Two-year Treasury yields slid about 3 basis points to about 4.15%, after inching higher on Monday following Richmond Fed President Thomas Barkin’s comments that he wanted to see more evidence inflation is easing to the 2% target. The dollar weakened against its Group-of-10 peers, snapping a two-day rally.
Other central banks may be poised for more tightening. In Australia, minutes from the Reserve Bank’s April meeting showed a quarter-point hike had been discussed before members decided on a pause. And an acceleration in UK wage growth is putting fresh pressure on the Bank of England.
The wage data buoyed the pound 0.5% versus the US dollar, while the Australian dollar jumped as much as 0.6%. Oil prices reversed earlier China-fueled gains, as data showed an output rebound in Russia and from shale.
“We need a bit of time to assess the true state of recovery in China and how strong, or sustainable, this recovery is going forward,” said Stuart Cole, chief macro economist at Equiti Capital in London.
Key events this week:
- US housing starts, Tuesday
- Fed’s Michelle Bowman discusses digital currency, Tuesday
- Eurozone CPI, Wednesday
- Fed releases Beige Book, Wednesday
- Fed’s John Williams gives a speech, Wednesday
- Fed’s Austan Goolsbee is interviewed on NPR, Wednesday
- China loan prime rates, Thursday
- Eurozone consumer confidence, Thursday
- US initial jobless claims, existing home sales, index of leading economic indicators, Thursday
- ECB issues report on March policy meeting, Thursday
- Fed’s Christopher Waller speaks at cryptocurrency-focused event, Thursday
- Fed’s Patrick Harker speaks on “monetary policy and housing”, Thursday
- Fed’s Loretta Mester discusses the economic and policy outlook, Thursday
- Fed’s Raphael Bostic discusses regional and national economic conditions, Thursday
- Fed’s Michelle Bowman and Lorie Logan speak at event, Thursday
- PMIs for Eurozone, Friday
- Japan CPI, Friday
- Fed’s Lisa Cook discusses economic research at an event, Friday
Some of the main moves in the market:
Stocks
Stocks
- S&P 500 futures rose 0.4% as of 7:58 a.m. New York time
- Nasdaq 100 futures rose 0.7%
- Futures on the Dow Jones Industrial Average were little changed
- The Stoxx Europe 600 rose 0.5%
- The MSCI World index rose 0.2%
- S&P 500 futures rose 0.4%
- Nasdaq 100 futures rose 0.7%
- The MSCI Asia Pacific Index rose 0.2%
- The MSCI Emerging Markets Index fell 0.3%
Currencies
- The Bloomberg Dollar Spot Index fell 0.3%
- The euro rose 0.4% to $1.0968
- The British pound rose 0.5% to $1.2442
- The Japanese yen rose 0.4% to 133.90 per dollar
- The offshore yuan was little changed at 6.8776 per dollar
Cryptocurrencies
- Bitcoin rose 3.1% to $30,380.83
- Ether rose 2.1% to $2,120
Bonds
- The yield on 10-year Treasuries declined three basis points to 3.57%
- Germany’s 10-year yield declined three basis points to 2.45%
- Britain’s 10-year yield advanced three basis points to 3.72%
Commodities
- West Texas Intermediate crude fell 0.4% to $80.54 a barrel
- Gold futures rose 0.5% to $2,016.10 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Jason Scott, John Cheng and Tassia Sipahutar.
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