US futures rise along with global stocks as Fed officials soothe inflation fears, sending bond yields lower

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Inflation has caused a volatile week on Wall Street.

US futures rose along with global stocks on Friday after Federal Reserve officials stepped in to try to soothe investor fears over rising inflation, and equities rebounded somewhat from sharp falls.

Commodities prices also recovered slightly after sliding earlier in the week on expectations that the Fed may cut back its support for the economy sooner than expected, while bond yields fell.

S&P 500 futures were 0.46% higher on Friday after the benchmark index rose 1.22% on Thursday. Futures for the tech-heavy Nasdaq 100 were up 0.67% and Dow Jones futures had risen 0.36%.

Despite Thursday’s rebound, the S&P 500 had fallen more than 2.8% across the week after sharp falls in the wake of Wednesday’s stronger-than-expected inflation report.

Consumer price index inflation jumped 4.2% year on year in April, the strongest rise since 2008.

The prospect of sustained stronger inflation has worried investors, as it eats into the returns on financial assets and raises the prospect that the Fed may reduce support for the economy to cool prices.

Yet the Fed has insisted it will look past this rise in inflation, which it argues will be temporary.

Fed governor Christopher Waller on Thursday reiterated the point, saying: “The factors putting upward pressure on inflation are temporary, and an accommodative monetary policy continues to have an important role to play in supporting the recovery.”

His words echoed other Fed officials and appeared to calm market nerves on Thursday and Friday.

Lee Hardman, currency analyst at Japanese bank MUFG, said: “The comments have had some dampening impact on Fed rate hike expectations.”

Bond yields, which move inversely to prices, pulled back after rising earlier in the week. The yield on the key 10-year US Treasury note was down 2.8 basis points to 1.640% on Friday.

Asian stocks rallied overnight, with China’s CSI 300 up 2.36% and Japan’s Nikkei 225 rising 2.32%. In Europe, the continent-wide Stoxx 600 was up 0.33% and Britain’s FTSE 100 had climbed 0.77%.

Commodities prices steadied after sharp falls earlier in the week, which were driven by concerns that higher inflation might force the Fed to raise interest rates sooner than previously expected, dampening the economy.

Oil prices gained, with Brent crude up 0.6% to $67.45 a barrel and WTI crude 0.74% higher to $64.29 per barrel.

Bloomberg’s agriculture and livestock commodity index was up 0.94% to 90.89, having tumbled from a high of more than 93.4 earlier in the week.

The dollar index was down 0.34% to 90.44, after climbing sharply on Tuesday. The greenback has been pulled in different directions by volatile bond-market action.

Bitcoin was marginally lower and traded at around $50,300 after a sharp fall on Wednesday and Thursday in the wake of Elon Musk’s decision to halt payments for Tesla in the cryptocurrency.

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US futures soar and global stocks climb as investors cheer huge Apple and Facebook earnings

Apple CEO Tim Cook
Apple CEO Tim Cook.

US stock futures climbed sharply on Thursday in the wake of blowout earnings from Apple and Facebook, and after the Federal Reserve promised to keep up its support for the economy.

Nasdaq 100 futures jumped 1%, boosted by the big-tech earnings. S&P 500 futures rose 0.67% while Dow Jones futures climbed 0.43% as investors also mulled a major speech by President Joe Biden on his taxing and spending plans.

Booming iPhone sales helped Apple’s profit more than double and revenue soar in its latest fiscal quarter, year on year. The company’s shares rose 2.82% in pre-market trading after it announced a $90 billion share buyback program.

Facebook’s revenue also jumped, helped by soaring advertising prices. Its shares rallied 7.04% in pre-market.

The Federal Reserve’s latest interest rate decision added to the good mood in the market. The Federal Open Market Committee held interest rates near zero and pledged to keep buying bonds at a pace of $120 billion a month.

And Fed Chair Jerome Powell signaled that the central bank would keep up its support for the economy, despite the outlook brightening, saying: “We’re a long way from our goals.”

The dollar index fell after the decision and press conference, standing at 90.65 on Thursday, down more than 2.7% in April.

In the bond market, the yield on the key US 10-year Treasury note fell on Wednesday, but picked up again on Thursday morning to stand at 1.647%. Yields move inversely to prices.

“The Fed maintained their very dovish policy stance overnight despite acknowledging the robust US economic recovery at the start of this year,” Lee Hardman, currency analyst at Japanese bank MUFG, said.

“The lack of any hawkish policy shift last night from the Fed has encouraged an extension of the bearish US dollar trend that has been in place this month.” Low US interest rates tend to make dollar-denominated investments less attractive, which weighs on the currency.

Asian and European stocks climbed on Thursday, supported by the Fed and a raft of strong earnings. China’s CSI 300 rose 0.88%, while Japanese markets were closed for a public holiday.

Europe’s Stoxx 600 was up 0.49% in early trading, boosted by strong earnings from consumer goods company Unilever and oil major Shell.

Oil prices – which boosted Shell’s results – rose for the third day on Thursday. The improving outlook in many of the world’s biggest economies supported the market, despite the raging pandemic in India.

Brent crude oil climbed 0.58% to $67.16 a barrel, while WTI crude climbed 0.58% to $64.23 a barrel.

Investors were also weighing President Joe Biden’s Wednesday night speech to Congress, in which he laid out his plan to boost spending and raise taxes to support the US economy.

Biden proposed higher taxes on companies and the rich to pay for a big expansion of the social safety net. He said: “It’s time for corporate America and the wealthiest 1 per cent of Americans to pay their fair share. Just pay their fair share.”

Stocks initially fell when Biden’s plan to raise taxes on investments were first reported last week, but have since recovered strongly.

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US futures and global stocks slip as investors brace for key inflation data and company earnings

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Asian stocks fell overnight as investors prepared for a busy week.

US futures slipped on Monday, as investors braced themselves for a busy week of economic data, company earnings and government bond sales, and digested Federal Reserve Chairman Jerome Powell’s comments that the US economy is at an “inflection point.”

Futures for the S&P 500 index were down 0.25%, while Dow Jones futures were 0.33% lower. Nasdaq 100 futures had fallen 0.15%.

Shares fell in Asia overnight, with China’s CSI 300 down 1.74% and Japan’s Nikkei 225 0.77% lower.

In Europe, the Stoxx 600 index slipped 0.43%. Britain’s FTSE 100 fell 0.81%, despite England reopening shops, gyms and pubs.

US stocks rose solidly in the week to Friday as bond yields fell, with the S&P 500 climbing 2.71% as tech stocks got a boost. Lower yields, which move inversely to prices, have helped the US’s giant tech stocks look like attractive investments during the COVID-19 crisis.

But analysts say bond yields have the potential to kick higher over the coming days in the wake of consumer inflation data due on Tuesday and three US bond auctions across the week.

Consumer price index inflation data is due on Tuesday, with economists polled by Reuters expecting a jump to 2.5% from 1.7% year on year in February.

Producer price inflation rose at the fastest rate in more than 9 years in March, data showed Friday, hitting 4.2% year on year.

The sale of 3-, 10-, and 30-year US government bonds could also unnerve the market if demand is low.

“I have suspected that the US yield story had not gone away,” Jeffrey Halley, senior market analyst at Oanda said. “This week’s data calendar will give plenty of ammunition to prove me right or wrong.”

Bond yields slipped on Monday, however, with the key 10-year US Treasury note yield down 1.1 basis points to 1.655%.

The dollar index was up 0.09% to 92.25.

Investors were also weighing up Fed Chair Jerome Powell’s latest comments.

The head of the world’s most powerful central bank said in an interview with CBS, which aired on Sunday, that the US is at an “inflection point” and is likely to see a boom in growth and hiring, but still faces threats from COVID-19.

“The outlook has brightened substantially,” he told CBS’s “60 minutes.” Yet he said there was a risk that coronavirus starts spreading again.

Another round of major company earnings is also set to begin, with Wall Street titans Goldman Sachs, JPMorgan, and Wells Fargo due to report on Wednesday.

Deutsche Bank analysts said in a note they expect S&P 500 earnings to come in 7.5% above consensus. That would be lower than the last 3 quarters, but still well above the historical average of a 4% beat.

The prospect of a busy week of data and earnings did little to oil prices. Brent crude was 0.43% higher at $63.23 a barrel on Monday, while WTI crude was up 0.32% at $59.48 a barrel.

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US tech stock futures rise as bond yields cool after Fed comments, while the Turkish lira plunges

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Jerome Powell stressed that the Fed would maintain support for the economy.

A fall in bond yields triggered a rise in US tech stock futures at the expense of the Dow Jones on Monday, with investors buying back into growth companies after the previous week’s volatility.

Meanwhile the Turkish lira tumbled as much as 15% against the dollar after the country’s president sacked a central bank chief for the third time in under two years.

Futures for the tech-heavy Nasdaq 100 index rose 0.69%, with the dip in bond yields making those more expensive sectors of the stock market more attractive.

Dow Jones futures were off by 1.2% as investors eyed a rotation out of cyclical companies, however, while S&P 500 futures were down 0.44%.

The yield on the key 10-year US Treasury note fell 4.8 basis points to 1.684% after hitting a 14-month high above 1.7% last week.

Bond yields have risen sharply in recent weeks as investors demand higher returns in response to rising growth and inflation expectations.

But the increase has made fast-growing and pricey tech stocks look less attractive, leading to a dynamic in which investors sell Nasdaq companies when yields rise and buy them up again when they fall.

Policymakers from the US Federal Reserve soothed the bond market somewhat over the weekend, as some investors worry the central bank could cut back its support sooner than expected.

Chair Jerome Powell wrote in a Wall Street Journal article: “The recovery is far from complete, so at the Fed we will continue to provide the economy with the support that it needs for as long as it takes.”

Richmond Fed President Thomas Barkin told Bloomberg TV there were no signs yet of undesirable inflation.

Asian stocks were mixed overnight, with China’s CSI 300 rising 1%, but Japan’s Nikkei 225 sliding 2.07%.

Hussein Sayed, chief market strategist at FXTM, said the fallout from the Turkish central bank debacle had knocked Japanese stocks.

“While there should not be a strong link between the Turkish lira and Japanese equity markets, it is believed that retail traders in Japan hold significant leveraged long positions in the lira as a carry trade. Hence, they have to cover these positions by selling equities in local markets,” he said.

The Europe-wide Stoxx 600 index slipped 0.09% in early trading while the UK’s FTSE 100 fell 0.32%.

Turkey’s lira tumbled to close to a record low before recovering somewhat after President Recep Tayyip Erdogan sacked central bank governor Naci Agbal. The currency was down 9.3% on Monday to $0.126.

The firing sparked concerns that Turkey could again cut interest rates, spurring more inflationary pressure.

Lee Hardman, currency analyst at MUFG, said: “Market participants are treating it as a Turkey specific problem so far, although there are clear risks that it could begin to weigh more broadly if the situation continues to escalate in the coming weeks and months.”

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US stocks set to hit new highs while oil soars as US jobless claims beat expectations and economies show signs of recovery

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Oil prices have jumped, with investors expecting a strong rebound in demand as economies recover.

US stocks were on track to rise to all-time highs Friday at the end of a stellar week in which the S&P 500 had already risen about 4% and was heading for its strongest weekly gain in three months.

Signs the US and other economies are recovering from the latest round of coronavirus restrictions have also boosted oil prices to one-year highs, as the demand outlook brightens.

After the index climbed more than 1% on Thursday, S&P 500 futures inched 0.28% higher on Friday. Dow Jones Industrial Average futures rose 0.29%, while Nasdaq futures climbed 0.22%.

China’s CSI 300 rose 0.17% overnight, finishing the week in the green, as the strong economic recovery outweighed worries over rising short-term credit costs. Japan’s Nikkei 225 jumped 1.54% on upbeat earnings and stimulus hopes.

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The Europe-wide Stoxx 600 index rose 0.42% in early trading, while the UK’s FTSE 100 climbed 0.11%.

Investors have been pulled in different directions in recent weeks. Hopes that vaccines and stimulus will power a strong recovery in 2021 have clashed with short-term economic pain and a day-trading frenzy that shook markets at the end of January.

But better-than-expected economic data from the US has sparked new optimism that the recovery will be a powerful one.

Figures released Thursday showed that new US unemployment claims fell last week for the third week in a row – to 779,000 – and factory orders rose more than expected in December.

The Bank of England on Thursday cut its short-term growth forecasts because of January’s lockdown. But it said the country’s speedy coronavirus vaccine rollout “should help the UK economy recover rapidly later this year.”

Adding to the general mood of optimism, Democrats in Congress are powering ahead with plans to pass a $1.9 trillion stimulus package without Republican approval.

Investors’ attention Friday will be on the official monthly US employment report, due at 8:30 a.m. ET. Economists at Daiwa expect a modest 50,000 increase in payrolls, following a 140,000 decline in December. Yet they said in a note that recent data suggested the figure could be better than expected.

Oil prices have soared this week as the economic outlook has brightened, with investors betting demand will rise. Brent crude was up 1.12% on Friday morning to $59.66 a barrel, its highest level since last February. Brent has gained more than 7% this week, its largest weekly increase in a month. West Texas Intermediate crude was 1.42% higher at $57.03 a barrel.

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“With inflation sentiment rising in the US, partially due to higher government borrowing, adding a tailwind to the economic recovery, the conditions still remain supportive for oil markets,” said Jeffrey Halley, a senior market analyst at the currency firm Oanda.

The dollar index slipped back from its highest level since December. It was last down 0.16% to 91.39.

A strong pound, after the Bank of England suggested negative interest rates were not likely anytime soon, added to greenback weakness. The pound was up 0.21% to $1.37 on Friday after jumping Thursday.

US bond yields were little changed. The yield on the 10-year Treasury note was roughly flat at 1.139% but continued to trade near its highest level since March, reflecting stronger growth and inflation expectations. Yields move inversely to bond prices.

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