European stocks rose on Tuesday as optimism mounted over plans to reopen the region, while US equity futures slid on weakness from tech giants on Wall Street. The dollar has recovered.
The Stoxx 600 index climbed 0.2%, boosted by travel and leisure companies after the European Union announced plans to reopen its borders to tourists after months of pandemic-induced restrictions. Miners advanced as a gauge of commodity prices sits at the highest level since 2012. Shares rose in Hong Kong, Australia and South Korea.
US futures fell after Tesla Inc. and Amazon.com Inc. weighed on the Nasdaq 100 on Monday. Treasuries slipped alongside most European bonds, while the digital Ether token extended its push to set another record as bigger rival Bitcoin slipped.
As the global economic recovery gathers pace with the successful deployment of vaccines across much of the developed world, investors remain risk-sensitive nonetheless. Inflation is a major concern, with a gauge of prices paid for materials reaching its highest level since 2008 on Monday. The extent of the rebound is also in question, after Federal Reserve Chairman Jerome Powell said economic progress had been uneven between racial and income divisions.
Meanwhile, fierce new waves of Covid-19 are enveloping India and parts of Southeast Asia, straining their healthcare systems and sparking calls for help.
“We believe inflationary pressures will continue this year and this is driven by the kind of politics we’ve seen around the world,” Rupal Agarwal, quantitative strategist at Sanford C Bernstein, told Bloomberg TV. “In the near term you can expect some market pullback, but the general sentiment remains bullish” as reopening and reflation trade remains in effect, she said.
Here are some key events to watch out for this week:
- The US trade balance, factory orders, durable goods are expected on Tuesday.
- Chicago Fed Chairman Charles Evans gives a virtual speech at an event hosted by Bard College on Wednesday. Cleveland Fed President Loretta Mester gives a virtual speech to the Boston Economic Club.
- Bank of England rate decision Thursday.
- The April US Jobs Report is released Friday.
Here are some of the main movements in the markets:
- Futures on the S&P 500 index fell 0.2% at 8:34 a.m. London time.
- The Stoxx Europe 600 index rose 0.2%.
- The MSCI Asia Pacific Index was little changed.
- The MSCI Emerging Market index was little changed.
- The Bloomberg Dollar Spot Index gained 0.4%.
- The euro fell 0.4% to $ 1.2017.
- The British pound fell 0.4% to $ 1.3857.
- The ground yuan was little changed at 6.475 to the dollar.
- The Japanese yen weakened 0.3% to 109.45 per dollar.
- The yield on 10-year Treasuries jumped one basis point to 1.61%.
- The yield on two-year Treasury bills rose one basis point to 0.16%.
- Germany’s 10-year yield rose less than a basis point to -0.20%.
- The UK 10-year yield fell one basis point to 0.834%.
- Japan’s 10-year yield was unchanged at 0.097%.
- West Texas Intermediate crude was little changed at $ 64.48 per barrel.
- Brent crude was little changed at $ 67.57 per barrel.
- Gold weakened 0.4% to $ 1,786.46 an ounce.
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