Stock Futures – Stock futures expected to rebound from the Dow Jones – The Wall Street Journal
U.S. equity futures rose on Monday, as the spread between short-term and long-term bond yields narrowed, a sign that investors are turning away from bets that benefit from a sustained rise in the dollar. inflation.
Futures linked to the Dow Jones Industrial Average rose 0.5%, suggesting a rebound after its tumultuous fall last week. At Friday’s close, the blue chip index had suffered its biggest drop since the week ended October 30.
S&P 500-related contracts climbed 0.3% on Monday, while Nasdaq-100 futures rose 0.3%, indicating gains on large tech stocks at the opening bell.
Equities seem poised to regain ground at the start of the week. Investors’ risk appetite took a hit last week after Federal Reserve officials signaled they may hike interest rates sooner than they previously expected. The comments caused stock, lumber and gold prices to pull back last week, before they spiked higher on Monday.
“There are no very strong convictions on the market for the moment”, specifies Nadège Dufossé, head of the asset allocation strategy at the management company Candriam. “The market is really focused on rate developments and comments from central banks.”
Stocks are expected to stay at roughly current levels, albeit with an increase in the choppy water, if market sentiment doesn’t change somehow, she added.
In bond markets, the yield on the 10-year Treasury bill fell to 1.440% from 1.449% on Friday. Bond yields fall as prices rise. The 10-year yield has fallen for five straight weeks, its longest string of losses since August 2019.
“It is completely linked to the fall in inflation expectations,” said Ms. Dufossé. “The market no longer takes into account the overheating of the American economy. Investors believe the Fed will be able to contain any overheating inflation.
The yield curve flattened as short-term yields rose to reflect higher rate expectations, while longer-term yields fell as higher short-term interest rates would likely mean more growth. slow and lower interest rates in the future. The biggest moves have been in the difference between 2-year yields and 30-year yields since Wednesday.
Higher economic growth and inflation in the coming months should support stocks as Americans increase spending on goods and services when pandemic restrictions ease, said Fahad Kamal, chief investment officer at Kleinwort Hambros. Long-term tech stocks and government bonds are expected to outperform if growth and inflation slow after 2023, he added.
“For most investors, looking through the asset landscape, there is still no alternative to equities,” Mr. Kamal said. “The hiring is done and normality returns, and all of this is really positive for cyclicity. It will never happen in a straight line. As last week showed, there is still huge volatility in stocks. “
Bitcoin has fallen more than 9% from its 5 p.m. ET level on Friday to $ 32,134.39 on Monday. Ether, the second largest cryptocurrency by market cap, has lost over 11% of its value and the cryptocurrency dogecoin joke has fallen over 20% to around 22 US cents. In recent weeks, digital assets have come under pressure as China has stepped up its crackdown on bitcoin mining.
Overseas, the pan-continental Stoxx Europe 600 grew by 0.1%.
Japan’s Nikkei 225 fell 3.3%, while Australia’s S & P / ASX 200 fell 1.8% and Hong Kong’s Hang Seng fell 1.1%. China’s Shanghai Composite was little changed, up 0.1%.
—Frances Yoon contributed to this article.
Write to Caitlin Ostroff at [email protected]
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