U.S. Futures Jump as Fed Seals Economic Confidence: Markets Wrap


(Bloomberg) — U.S. stock-index futures raced ahead, and Treasury yields rose, as the Federal Reserve’s dovish assurances and blow-out earnings from technology giants cemented conviction the world’s largest economy is resurgent.

The June contract on Nasdaq 100 Index advanced 1%, outperforming a gain for S&P 500 futures. Apple Inc. and Facebook Inc., whose big beats vindicated investors’ heightened expectations, climbed in premarket New York trading. The 10-year rate headed for the biggest weekly increase since March 19, and a key gauge of commodities was on course for the longest rally in more than three years.

The Fed strengthened its assessment on the economy, reaffirming aggressive support amid a need for further progress in employment and inflation. Chair Jerome Powell dismissed worries about price surges or anecdotes of labor shortage, implying the central bank is prepared to run the economy hot for a while. President Joe Biden unveiled a $1.8 trillion spending plan targeted at American families, adding to the economic optimism.

“Equities should continue to power higher but there will be bouts of volatility along the way,” Mehvish Ayub, State Street Global Advisors senior investment manager, said on Bloomberg TV. “Yields should continue to trend higher, and this is very much a reflection of better economic prospects so it’s not really a negative for equity markets.”

With their plans, the Fed and Biden have delivered a boost to investor sentiment that had see-sawed in recent days between optimism over a string of robust economic data and caution amid high valuations and speculation about stimulus tapering by year-end. A release today may show U.S. gross domestic product quickened to a 6.6% annualized growth in the first quarter.

The Bloomberg Dollar Spot Index rose 0.1% Thursday, still on course for its biggest monthly loss since July. That helped emerging-market stocks and currencies extend their rally, underscoring the risk-on sentiment. Copper rose for a fifth day.

Apple rose 3% in early New York trading after reporting revenue that crushed Wall Street forecasts. Facebook jumped 7% as it posted sales that dwarfed estimates on the back of a 10% growth in active users. With almost half of the S&P 500 companies having reported results so far, almost 90% have either met or beaten expectations.

In Europe, the benchmark Stoxx 600 gauge added 0.5%, moving closer to a record reached earlier in April. Personal-care shares led gains after Unilever delivered a sales beat and announced a share buyback. Oil giants Total SE and Royal Dutch Shell Plc boosted their sector after reporting better-than-forecast profits.

Crude oil extended gains on a confident outlook on demand from OPEC and its allies, despite the threat from India’s Covid-19 crisis. The Bloomberg Commodity Index increased for a ninth day, nearing a three-year high on a closing basis.

In South Korea, Samsung Electronics Co. beat analysts’ profit forecasts but warned of further fallout from chip shortages. Hong Kong led gains in Asia, where Japan was shut for a holiday.

Here are some key events to watch this week:

U.S. GDP Thursday is forecast to show growth strengthened in the first quarter

These are some of the main moves in markets:

Stocks

Futures on the S&P 500 Index advanced 0.6% as of 9:32 a.m. London time.The Stoxx Europe 600 Index gained 0.5%.The MSCI Asia Pacific Index climbed 0.3%.The MSCI Emerging Market Index increased 0.4%.

Currencies

The Bloomberg Dollar Spot Index gained 0.1%.The euro declined 0.1% to $1.2113.The British pound climbed 0.1% to $1.3945.The onshore yuan strengthened 0.2% to 6.466 per dollar.The Japanese yen weakened 0.3% to 108.95 per dollar.

Bonds

The yield on 10-year Treasuries advanced four basis points to 1.65%.The yield on two-year Treasuries climbed less than one basis point to 0.17%.Germany’s 10-year yield gained one basis point to -0.22%.Britain’s 10-year yield advanced two basis points to 0.82%.Japan’s 10-year yield gained one basis point to 0.098%.

Commodities

West Texas Intermediate crude gained 0.5% to $64.25 a barrel.Brent crude gained 0.6% to $67.71 a barrel.Gold weakened 0.3% to $1,776.94 an ounce.

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