US equity futures ticked higher as speculation that central banks are likely to stay hawkish for the coming months weighed on gains. German government bonds fell as traders braced for fresh inflation data.
(Bloomberg) — US equity futures ticked higher as speculation that central banks are likely to stay hawkish for the coming months weighed on gains. German government bonds fell as traders braced for fresh inflation data.
Futures for the S&P 500 and Nasdaq 100 clung to modest gains after a slew of data showed that China’s economy is on track for a stronger recovery. The Stoxx Europe 600 Index bounced 0.3%.
“US index futures are trying to rebound this morning following stronger than expected China figures suggesting the economy is responding positively to the reopening,” Peter Garnry, head of equity strategy at Saxo Bank, said in a note.
Among individual US premarket stock movers, Novavax Inc. plummeted as much as 25% after the Covid-19 vaccine maker warned over substantial doubt over its ability to stay in business and Rivian Inc. slumped as much as 9.3% on supply-chain snags.
Bonds in Europe extended their slump after hot inflation data caused a reassessment of rate expectations, picking up a theme that has dominated trading in a month where the Federal Reserve signalled its intention to ratchet rates higher than the market had been anticipating.
The next pressure point could come at 1pm London time, when Germany’s national CPI figures are published.
Bond traders no longer view the odds of a Fed rate cut this year as better than-even, a shift from what they were expecting just a month ago. Market expectations also see the European Central Bank raising rates through February 2024, with a 4% ECB terminal rate fully priced.
“February has poured cold water on hopes that policy makers may quickly tame inflation towards target,” Generali Investments strategists wrote in their monthly outlook. “We now have even higher peak rates in our books.”
Key events this week:
- Eurozone S&P Global Eurozone Manufacturing PMI, Wednesday
- US construction spending, ISM Manufacturing, light vehicle sales, Wednesday
- Eurozone CPI, unemployment, Thursday
- US initial jobless claims, Thursday
- Eurozone S&P Global Eurozone Services PMI, PPI, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures rose 0.2% as of 7:09 a.m. New York time
- Nasdaq 100 futures rose 0.4%
- Futures on the Dow Jones Industrial Average rose 0.2%
- The Stoxx Europe 600 rose 0.3%
- The MSCI World index rose 0.5%
Currencies
- The Bloomberg Dollar Spot Index fell 0.6%
- The euro rose 0.9% to $1.0669
- The British pound rose 0.3% to $1.2055
- The Japanese yen rose 0.7% to 135.27 per dollar
Cryptocurrencies
- Bitcoin rose 2.6% to $23,743.2
- Ether rose 3.2% to $1,656.77
Bonds
- The yield on 10-year Treasuries was little changed at 3.93%
- Germany’s 10-year yield advanced three basis points to 2.68%
- Britain’s 10-year yield declined three basis points to 3.79%
Commodities
- West Texas Intermediate crude fell 0.9% to $76.34 a barrel
- Gold futures rose 0.3% to $1,842 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Brett Miller, Lu Wang and Isabelle Lee.
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