(Bloomberg) — U.S. equity futures advanced on Monday, stirring tentative hopes of some respite after one of the worst stretches for global shares last week since the pandemic began.
Contracts on the Nasdaq 100 climbed as much as 1% and those on the S&P 500 rose 0.7%. Stocks in Europe pared an early decline, while most Asian benchmarks dropped as traders weighed the likely market impact of Federal Reserve monetary-policy tightening.
The Fed on Wednesday is expected to signal a March liftoff in interest rates and balance-sheet reduction later this year to help fight inflation. Ebbing stimulus is forcing a rethink about the economic and market outlook.
How the policy shift will affect fixed income is among the key questions. The Treasury 10-year yield dipped along with rates on most European bonds. A dollar gauge ticked higher.
Aside from the Fed, earnings updates from titans such as Apple Inc. will shape sentiment too in the days to come following an uneven start to the reporting season. Tech stocks have borne the brunt of an equity selloff this year, while some less richly valued parts of the market have held up better.
There is “likely a longer term rotation toward value stocks measured in quarters, not weeks” unfolding, Julian Emanuel, chief equity and quantitative strategist at Evercore ISI, wrote in a note. “Investors should retain a balanced view, staying patient in committing new capital to equities.”
Goldman Sachs Group Inc. economists said they see a risk the Fed will tighten monetary policy more aggressively this year than the Wall Street bank now anticipates.
Speculators in Retreat
“A March lift-off and four hikes in 2022 are already fully priced in,” said Xavier Chapard, global macro strategist at Credit Agricole CIB. “But we expect Chair Powell to remain hawkish and not offer any pushback. Not supportive for risky assets.”
In the volatile cryptocurrency sector, bruised Bitcoin slipped below $35,000, extending a plunge over the past three days. Digital coins have shed more than $1 trillion in value since a November high.
Elsewhere, a commodities gauge remains near a record level, powered in part by a rally in oil that’s helping to stoke global price pressures.
Meanwhile, Russia’s MOEX index slumped as much as 2.5% as traders monitor U.S.-Russia tension over Ukraine. Russia is continuing a military buildup near the Ukrainian border but denies that it’s planning a further invasion of the nation. The U.S. ordered family members at its embassy in Kyiv to leave Ukraine.
For more market analysis, read our MLIV blog.
What to watch this week:
- Earnings reports are due from companies including Apple, Boeing, GE, 3M, Deutsche Bank, Microsoft, Samsung Electronics and Tesla
- PMIs for Eurozone, France, Germany, U.K. and Australia, Monday
- Australia CPI, Tuesday
- Federal Reserve rate decision and Chair Jerome Powell news conference, Wednesday
- Bank of Canada interest-rate decision, Wednesday
- EIA crude oil inventory report, Wednesday
- U.S. fourth-quarter GDP growth data, plus U.S. initial jobless claims and durable goods, Thursday
- U.S. consumer income, University of Michigan consumer sentiment figures, Friday
Some of the main moves in markets:
Stocks
- The Stoxx Europe 600 fell 0.2% as of 8:25 a.m. London time
- Futures on the S&P 500 rose 0.7%
- Futures on the Nasdaq 100 rose 0.9%
- Futures on the Dow Jones Industrial Average rose 0.6%
- The MSCI Asia Pacific Index fell 0.7%
- The MSCI Emerging Markets Index fell 1.2%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro fell 0.2% to $1.1323
- The Japanese yen was unchanged at 113.68 per dollar
- The offshore yuan was little changed at 6.3358 per dollar
- The British pound was little changed at $1.3550
Bonds
- The yield on 10-year Treasuries declined one basis point to 1.74%
- Germany’s 10-year yield declined two basis points to -0.08%
- Britain’s 10-year yield declined two basis points to 1.15%
Commodities
- Brent crude rose 0.6% to $88.38 a barrel
- Spot gold rose 0.3% to $1,841.14 an ounce
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