(Bloomberg) — U.S. futures rose with stocks Thursday on bets that central banks can move toward tighter policies to curb inflation without derailing economic growth.
S&P 500 and Nasdaq 100 contracts advanced, with tech giants such as Apple Inc. rising in premarket trading, signaling more gains after a late Wednesday rally. European equities held an advance after the region’s central bank unveiled a gradual pullback of pandemic stimulus, while the pound jumped after the Bank of England unexpectedly raised rates.
The Treasury yield curve steepened and the dollar was lower. The euro extended gains after the European Central Bank decision.
Central banks around the world are weighing measures to fight price pressures while balancing risks to growth from the omicron virus variant. The Federal Reserve said it will double the pace at which it tapers bond purchases, and projected rate increases through 2024. The market’s early response signals some relief arising from policy clarity.
“The market is breathing a sigh of relief that the FOMC meeting suggested that it is taking inflation risks in the United States more seriously,” Ann-Katrin Petersen, an investment strategist at Allianz Global Investors, said in an interview with Bloomberg TV. “The question really will be whether the Fed will dare to do even more in order to taper the inflation risk.”
The five-year breakeven rate on Treasury inflation protected securities — or the difference between those yields and the ones on typical Treasuries — touched 2.8%. That suggests the Fed still faces a challenge to get inflation down toward its 2% target.
Meanwhile, data showed U.S. jobless claims rose more than forecast last week.
“The markets seem to be complacent about the idea the Fed can get a soft landing, can engineer this graceful soft landing with not a lot of rate hikes,” Diane Swonk, chief economist at Grant Thornton, said on Bloomberg Television.
Elsewhere, oil and gold prices rose. Asian equities also climbed. Bitcoin fell below $49,000.
Here are some key events this week:
- U.S. industrial production, Thursday.
- BOJ monetary policy decision, Friday.
- S&P Dow Jones Indices quarterly rebalance effective after markets close, Friday.
- “Quadruple witching” day in the U.S. market, when options and futures on indexes and equities expire, Friday.
For more market analysis, read our MLIV blog.
Some of the main moves in markets:
Stocks
- Futures on the S&P 500 rose 0.6% as of 8:38 a.m. New York time
- Futures on the Nasdaq 100 rose 0.4%
- Futures on the Dow Jones Industrial Average rose 0.6%
- The Stoxx Europe 600 rose 1.4%
- The MSCI World index rose 0.6%
Currencies
- The Bloomberg Dollar Spot Index fell 0.4%
- The euro rose 0.4% to $1.1339
- The British pound rose 0.7% to $1.3360
- The Japanese yen was little changed at 114.11 per dollar
Bonds
- The yield on 10-year Treasuries was little changed at 1.46%
- Germany’s 10-year yield advanced three basis points to -0.33%
- Britain’s 10-year yield advanced eight basis points to 0.81%
Commodities
- West Texas Intermediate crude rose 0.8% to $71.41 a barrel
- Gold futures rose 1.4% to $1,789.20 an ounce
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