Nasdaq stock futures rose, signaling a rebound from recent losses, as conviction mounts that an economic downturn may prove less severe than feared.
(Bloomberg) — Nasdaq stock futures rose, signaling a rebound from recent losses, as conviction mounts that an economic downturn may prove less severe than feared.
Contracts on the tech-heavy benchmark added 0.4% after the index closed with a 1.4% loss on Monday. Tesla Inc. advanced 1.3% in pre-market trading, while Advanced Micro Devices Inc. Amazon.com Inc and Meta Platforms Inc. also gained. Walgreens Boots Alliance Inc. shares tumbled as the company slashed earnings forecasts, citing less demand for Covid-related care.
Moves in other markets were relatively muted. The broader S&P 500 Index rose 0.1%, while Europe’s Stoxx 600 Index traded in the red after European Central Bank President Christine Lagarde dashed hopes of an imminent end to the interest-rate hiking cycle. The gauge is on track for a seventh day of declines and the longest losing streak since February 2018.
Investors are coming to terms with the view that the Federal Reserve won’t cut interest rates this year and other central banks will continue raising rates to quell inflation. Morgan Stanley economists said in a research note on Tuesday that they see the Fed hiking by 25 basis points next month.
On the positive side, there’s growing speculation among investors that any recession may be shallower than expected. That view was reinforced by latest US data that showed durable goods orders rose more than expected in May.
“Growth has held up well thus far,” said Mark Dowding, chief investment officer at BlueBay Asset Management. “With central banks nearing the end of their rate hiking cycles, this has fed hopes of a relatively soft landing in economic terms, without a more severe recession.”
AI Frenzy Is the Oldest Tale in Markets: The Rich Getting Richer
Lagarde’s comments at the ECB’s annual retreat in Portugal adds to evidence that central banks will keep pushing rates higher and possibly send fragile economies into reverse. Her peers from the US, Japan and the UK are slated to speak at the same forum later this week.
Some of the concerns for the world economy have been tempered by signs China is pushing back against investors’ pessimism and stepping up support for its currency. While Beijing will likely remain wary of adding excessive stimulus, the state-owned China Securities Journal said Tuesday that pro-growth measures would improve the yuan’s outlook.
The yuan strengthened against the greenback after tumbling 1% on Monday. The MSCI China Index climbed 1.9%, marking a recovery from a six-day rout that wiped off more than 6%.
Investors are also increasingly of the view that companies may escape a sharp earnings recession even as growth slows. Goldman Sachs Group Inc. strategists on Tuesday flagged “fat and flat” equity returns in the coming year, with stagnant profit growth this year and mid-single digit expansion in 2024.
“We do see a wobble in the economy towards the end of this year. However, the big question is how does that affect equities, and we’re somewhat more positive,” Alan Higgins, chief investment officer at Coutts & Co., said on Bloomberg TV.
“The equity market can be very much more forward looking than other markets,” he added.
Key events this week:
- US new home sales, durable goods, Conference Board consumer confidence, Tuesday
- US wholesale inventories, goods trade balance, Wednesday
- Fed to unveil results of annual banking industry stress test, Wednesday
- Policy panel with ECB’s Christine Lagarde, Fed Chair Jerome Powell, BOJ’s Kazuo Ueda and BOE’s Andrew Bailey speak, Wednesday
- Eurozone economic confidence, consumer confidence, Thursday
- US GDP, initial jobless claims, Thursday
- Atlanta Fed President Rafael Bostic speaks, Thursday
- China manufacturing PMI, non-manufacturing PMI, balance of payments, Friday
- US personal income and spending, University of Michigan consumer sentiment, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures rose 0.2% as of 8:34 a.m. New York time
- Nasdaq 100 futures rose 0.4%
- Futures on the Dow Jones Industrial Average fell 0.2%
- The Stoxx Europe 600 fell 0.4%
- The MSCI World index was little changed
Currencies
- The Bloomberg Dollar Spot Index fell 0.2%
- The euro rose 0.4% to $1.0955
- The British pound rose 0.1% to $1.2730
- The Japanese yen was little changed at 143.55 per dollar
- The offshore yuan rose 0.4% to 7.2135 per dollar
Cryptocurrencies
- Bitcoin rose 1.7% to $30,666.94
- Ether rose 1.6% to $1,880.55
Bonds
- The yield on 10-year Treasuries was little changed at 3.73%
- Germany’s 10-year yield was little changed at 2.31%
- Britain’s 10-year yield advanced two basis points to 4.32%
Commodities
- West Texas Intermediate crude fell 1.5% to $68.31 a barrel
- Gold futures rose 0.2% to $1,937.70 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Tassia Sipahutar and Anchalee Worrachate.
(updates prices thoughout, adds US durable goods data)
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.