U.S. futures rose with stocks as signs of China’s recovery stoked optimism about the global economy. Treasuries and the dollar also advanced.
(Bloomberg) — U.S. futures rose with stocks as signs of China’s recovery stoked optimism about the global economy. Treasuries and the dollar also advanced.
Wall Street was poised for gains on the first trading session of 2023 as contracts on all three major U.S. gauges gained. Tesla Inc. dropped 2.6% in premarket trading after fourth-quarter deliveries missed estimates. The Stoxx Europe 600 Index climbed, with a surprise drop in German unemployment signaling resilience in the region’s biggest economy.
A recovery in subway use in China indicated Covid infections may have peaked in some of the country’s biggest cities, spurring a rally in Hong Kong stocks and U.S.-listed Chinese firms. Alibaba Group Holding Ltd., Baidu Inc. and electric-vehicle maker Nio Inc. were among advancers in premarket trading.
Investors are also scooping up US government debt, betting the Federal Reserve will slow its pace of interest rate hikes. Treasuries on Tuesday headed for their strongest start to a year in more than two decades.
Markets are kicking off 2023 on a positive note after equities last year posted the worst drop since the global financial crisis, while bonds also fell as central banks hiked interest rates to curb inflation. Some pressure eased in the final months of 2022 as Fed officials pointed to a less-aggressive tightening path, while China’s exit from its Zero Covid policy also helped sentiment.
“Hopes that supply chain issues in China will continue to ease, which could help bring down inflation, may be feeding into sentiment,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown. Traders are “seizing onto glimmers of hope that once the winter waves die down, China’s recovery could be back on track.”
Elsewhere, oil declined under pressure from a stronger dollar, reversing earlier gains. European gas prices slid as persistent mild weather curbed demand.
The yen briefly strengthened to a six-month high versus the greenback, before giving up gains.
Read more: Treasury Strategists Expect Lower Yields, Steeper Curve in 2023
The main markets moves are:
Stocks
- S&P 500 futures rose 0.5% as of 7:52 a.m. New York time
- Nasdaq 100 futures rose 0.7%
- 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 rose 0.8%
- The euro fell 1.2% to $1.0543
- The British pound fell 0.7% to $1.1964
- The Japanese yen was little changed at 130.89 per dollar
Cryptocurrencies
- Bitcoin fell 0.3% to $16,705.82
- Ether fell 0.4% to $1,214.57
Bonds
- The yield on 10-year Treasuries declined 12 basis points to 3.75%
- Germany’s 10-year yield declined six basis points to 2.39%
- Britain’s 10-year yield declined eight basis points to 3.59%
Commodities
- West Texas Intermediate crude fell 1.1% to $79.34 a barrel
- Gold futures rose 0.9% to $1,841.90 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Jason Scott, Tassia Sipahutar, Richard Henderson, Sagarika Jaisinghani and James Hirai.
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