U.S. stock futures rose and bond yields crept lower as investors grew more comfortable with the inflation outlook and the pace of the economic recovery.
Futures tied to the S&P 500 added 0.4%, pointing to a positive start to the week after the broad-market index fell moderately for two weeks in a row. Nasdaq-100 futures rose 0.6%, suggesting gains for technology stocks after the opening bell.
Investors are keeping a close eye on inflation indicators to determine whether a rise in prices will be temporary or longer-term. Companies that are able to pass along higher costs to consumers such as in energy and materials have been an increasingly popular trade, while technology companies’ shares and bonds have lagged.
“Inflation concerns have lessened, there’s more of a wider recognition that inflation will be transitory,” said Fahad Kamal, chief investment officer at Kleinwort Hambros. “This is reflecting the fact that we hit the fastest part of the recovery. Growth, while continuing, is going to be at a decelerating pace.”
In bond markets, the yield on the benchmark 10-year Treasury note declined to 1.620% Monday from 1.629% Friday. Yields fall when prices rise.
Cryptocurrencies continued a dramatic stretch of trading. Bitcoin rose moderately after touching multi-month lows Sunday and traded around $37,000, a 5% rise from Friday at 5 p.m. ET. The cryptocurrency has lost over 40% of its value since its mid-April peak.
“Decentralized finance is facing its first real challenge since inception. We don’t think that this is the end, the bubble has not really popped yet,” said Monica Defend, global head of research at Amundi. “Central banks are ready to play in the digital currency field, I expect with the central banks in play, there will be more regulation to come and more transparency.”
The Chicago Fed National Activity Index, which is seen as a gauge of economic activity and inflationary pressure, will be published at 8:30 a.m. ET.
Federal Reserve Gov. Lael Brainard will be speaking about digital currencies at a virtual event organized by CoinDesk at 9 a.m.
Earnings season is winding down. This week, technology companies including
on Wednesday and
and Dell Technologies on Thursday, are set to report.
In premarket trading, Moderna rose 1.7% after striking a deal with
Samsung’s
biotech division to manufacture its Covid-19 vaccines in South Korea.
In commodities, global benchmark Brent crude rose 1.4% to $67.38 a barrel. Analysts at
put out a note on Sunday with a forecast that it will reach $80 by summer.
“It’s still kind of punching in the green light for inflation flows into commodities,” said Gregory Shearer, a commodities analyst at JPMorgan. But the Federal Reserve minutes last week, “where they began to talk about tapering, this makes people somewhat less concerned about [inflation] running away out of hand.”
Overseas, the pan-continental Stoxx Europe 600 was relatively flat, wavering between small gains and losses. Monday is a public holiday in several European countries, including Germany and Denmark.
Among European equities, IT services company Solutions 30 plunged over 70% after auditor EY declined to sign off on its accounts. The plunge erased around 800 million euros, equivalent to roughly $974 billion, in market capitalization, leaving it worth around 300 million euros.
In Asia, major benchmarks were mixed. The Shanghai Composite Index advanced 0.3% while Hong Kong’s Hang Seng Index slipped 0.2%.
Investors are growing more comfortable with the inflation outlook.
Photo:
Courtney Crow/Associated Press
Write to Anna Hirtenstein at anna.hirtenstein@wsj.com
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