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US futures rise with stocks as bond rally stalls: markets wrap

The dollar was flat against a basket of major currencies.
Image: Kiyoshi Ota/Bloomberg

US equity futures steadied on Friday and stocks in Europe rose, while Treasuries halted an eight-day rally fueled by concerns about global growth amid the spread of Covid-19 variants.

The Stoxx Europe 600 index advanced, with all sectors in the green, as some of the world’s biggest money managers bet on a swift comeback for the battered reflation trade. Contracts on the S&P 500 and Nasdaq 100 edged higher following Thursday’s selloff in the underlying gauges. The dollar was flat against a basket of major currencies.

JPMorgan Asset Management, BlackRock Inc. and Morgan Stanley Wealth Management — which together account for some $12 trillion in assets — are among money managers saying global growth is still on track. The European Central bank on Thursday indicated it will tolerate an inflation overshoot, implying an even longer period of loose policy to support the recovery.

“The sharp reversal in reflation trades looks overdone to us,” Barclays Plc strategists led by Emmanuel Cau wrote in a note. Still, “erratic price action could continue” amid “poor summer liquidity, activity data peaking, rising Covid cases, supply bottlenecks and the Fed closer to tapering,” they said.

Elsewhere, MSCI Inc.’s Asia-Pacific stock gauge pared declines after reaching the lowest since mid-May. Economically sensitive sectors such as industrials sapped the index, with equities from Japan to Australia retreating.

The 10-year Treasury yield remains on course for one of its biggest weekly slides since June 2020. In US hours the 30-year yield broke below 1.90% for the first time since February.

Meanwhile, tension between the US and China continues to bubble. Washington will add at least 10 Chinese entities to its economic blacklist as early as Friday over alleged human rights abuses and high-tech surveillance in Xinjiang, according to a report.

Oil headed for a weekly loss after being whipsawed by the OPEC+ dispute. Bitcoin is again in the lower part of a trading range, emblematic of a reduced ardor for speculative investments like cryptocurrencies and meme stocks.

On the virus front, Pfizer Inc. plans to request US emergency authorization in August for a third booster dose of its Covid-19 vaccine and said it’s confident it will be effective against the more-virulent delta variant. South Korea will raise curbs on social distancing to the highest level in Seoul for two weeks starting Monday.

Here are some events to watch this week:

  • The Group of 20 finance ministers and central bankers meet in Venice on Friday
  • China PPI and CPI data released on Friday

These are some of the main moves in markets:

Stocks

  • Futures on the S&P 500 rose 0.1% as of 8:34 a.m. London time
  • Futures on the Nasdaq 100 were little changed
  • Futures on the Dow Jones Industrial Average rose 0.2%
  • The Stoxx Europe 600 rose 0.6%
  • The MSCI World index was little changed

Currencies

  • The Bloomberg Dollar Spot Index was little changed
  • The euro fell 0.1% to $1.1829
  • The British pound fell 0.1% to $1.3767
  • The Japanese yen fell 0.3% to 110.04 per dollar

Bonds

  • The yield on 10-year Treasuries advanced four basis points to 1.33%
  • Germany’s 10-year yield was little changed at -0.31%
  • Britain’s 10-year yield advanced one basis point to 0.63%

Commodities

  • West Texas Intermediate crude rose 0.6% to $73.36 a barrel
  • Gold futures rose 0.2% to $1 803.50 an ounce
© 2021 Bloomberg

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