Stocks, US Futures Rise as Inflation Worries Ease: Markets Wrap

(Bloomberg) — U.S. stock-index futures rose as softer oil prices and a weaker dollar signaled fears about inflation and the pace of monetary tightening are fading.

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Futures on the S&P 500 and Nasdaq 100 indexes advanced at least 0.2% each after the underlying gauges capped the first three-day rally since May on Wednesday. Asian semiconductor shares rallied after Samsung Electronics Co. reported a better-than-forecast revenue jump. The US two- and 10-year yield curve steepened by 1 basis point though it remained inverted for a third day.

Investors have been whipsawed in the past two weeks between concern over runaway inflation and the potential for a US recession. Even though the minutes of the Federal Reserve’s last meeting showed policymakers’ resolve to continue hiking rates, oil-price declines are calming investors over the pace of tightening needed.

“Global equities bounce as pressure points such as rates, oil and the dollar begin to ease,” Stephen Innes, managing partner at SPI Asset Management, wrote in a note. “Momentum has swung higher, with tech-heavy benchmarks outperforming after Samsung’s revenue was better than feared.”

Samsung’s revenue jump assuaged fears about weakening consumer demand and soaring material costs. That sparked a rally in chipmakers, helping MSCI Inc.’s Asia-Pacific share index add more than 1%. In China, however, tech stocks fell after Shanghai reported the most virus infections since late May.

Carmakers in Europe posted some of the biggest gains in the benchmark Stoxx 600 index, which gained for a second day. Overnight gains in US stocks helped both Asia and Europe.

Treasuries fell, with the 10-year yield rising faster than the two-year rate. That reversed the trend of the past few days when the short-end yield had surged amid inflation bets while the long end was capped by slowdown concerns.

The Bloomberg Dollar Spot Index retreated for the first time in five days. The euro rebounded from levels that took the shared currency to the brink of parity with the greenback.

In the UK, Johnson will leave, an official source said, after his own party’s lawmakers sought his resignation amid a series of scandals. The pound rose as much as 0.6% on the news before paring the gains.

Oil languished, with West Texas Intermediate futures on course for a 9% weekly loss, as investors weighed a potential global slowdown against signs of still-tight physical markets.

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What to watch this week:

  • EIA crude oil inventory report, Thursday

  • Fed Governor Christopher Waller, St. Louis Fed President James Bullard, scheduled to speak, Thursday

  • ECB account of its June policy meeting, Thursday

  • US employment report for June, Friday

Some of the main moves in markets:

Stocks

  • The Stoxx Europe 600 rose 1.2% as of 10 a.m. London time

  • Futures on the S&P 500 rose 0.2%

  • Futures on the Nasdaq 100 rose 0.4%

  • Futures on the Dow Jones Industrial Average rose 0.2%

  • The MSCI Asia Pacific Index rose 1.1%

  • The MSCI Emerging Markets Index rose 0.9%

Currencies

  • The Bloomberg Dollar Spot Index fell 0.1%

  • The euro rose 0.1% to $1.0194

  • The Japanese yen fell 0.1% to 136.12 per dollar

  • The offshore yuan rose 0.1% to 6.7057 per dollar

  • The British pound rose 0.3% to $1.1962

Bonds

  • The yield on 10-year Treasuries advanced three basis points to 2.96%

  • Germany’s 10-year yield advanced nine basis points to 1.30%

  • Britain’s 10-year yield advanced seven basis points to 2.16%

Commodities

  • Brent crude rose 0.1% to $100.80 a barrel

  • Spot gold rose 0.2% to $1,742.32 an ounce

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