US equity futures saw gains as investors eagerly awaited upcoming data on price pressures in the economy for insights into the Federal Reserve’s policy direction.
Contracts on the S&P 500 rose by approximately 0.2% following the index’s third consecutive week of gains. Meanwhile, contracts on the Nasdaq 100 climbed by 0.3%. Google’s parent company, Alphabet Inc., experienced a 1.7% drop in premarket trading after reports emerged that Apple Inc. was nearing an agreement with OpenAI to utilize the startup’s artificial intelligence technology on the iPhone. Despite this, Apple shares rose by 1.3%.
Treasury yields decreased while the dollar remained stable.
All eyes are on US producer prices set to be released on Tuesday, ahead of the inflation data for April the following day. Recent data has indicated a slowing economy alongside persistent inflation, posing challenges for interest rate forecasts.
“We need a catalyst to break the range on rates or change our view on risky assets,” stated Mohit Kumar, chief economist for Europe at Jefferies International. “US CPI data this week could be a potential catalyst. Even though US data has started to show some signs of moderating, inflation remains sticky, creating fears of stagflation.”
Other notable premarket movers included AC Immune SA, whose shares surged following a licensing deal with Takeda Pharmaceutical Co. worth up to $2.2 billion to develop immunotherapies targeting toxic proteins in Alzheimer’s patients’ brains. GameStop also experienced a significant increase, continuing its 57% rally from May.
The Stoxx Europe 600 index remained relatively unchanged after recording its best weekly return since January amid optimism surrounding the European Central Bank’s potential policy easing next month.
According to a Bloomberg poll of analysts, the euro-area economy is expected to expand more rapidly than previously anticipated this year, with Germany emerging from over a year of near-stagnation. This positive sentiment has been supported by first-quarter GDP readings exceeding expectations and inflation moving closer to 2%.
Asian stocks displayed mixed performances, with Hong Kong’s equity benchmark reaching its highest level since August, while mainland China equities also saw gains. Conversely, shares in South Korea, Japan, and Australia declined.
China’s announcement of plans to issue ultra-long special bonds boosted market sentiment following weak data released over the weekend that initially led to losses in Asian stocks. Concerns regarding potential further US-China trade tensions were also present, particularly after reports suggested President Biden was considering increasing tariffs on Chinese electric vehicles.
“You are looking at a slightly muddied growth outlook for China,” remarked Sonal Desai, chief investment officer at Franklin Templeton, during an interview on Bloomberg Television. Desai also predicted a rise in US-China trade tensions regardless of the outcome of the upcoming US presidential election.
Oil prices increased on hopes that China’s bond plan would stimulate growth, while traders monitored OPEC+’s discussions about extending supply curbs at their upcoming policy meeting. Additionally, both iron ore and copper prices continued to rise.
Key events scheduled for the week include Euro-area finance ministers meeting in Brussels on Monday, Australia’s 2024-25 budget release on Tuesday, and the Japan PPI report on the same day. Fed Chair Jerome Powell and ECB Governing Council member Klaas Knot are also set to speak on Tuesday, among other events.
In terms of market performance, S&P 500 futures rose by 0.2%, Nasdaq 100 futures increased by 0.3%, and futures on the Dow Jones Industrial Average saw a 0.2% rise. The Stoxx Europe 600 index fell by 0.1%, while the MSCI World index remained relatively unchanged.
Regarding currencies, the Bloomberg Dollar Spot Index decreased by 0.1%, the euro rose by 0.2% to $1.0796, the British pound increased by 0.2% to $1.2548, and the Japanese yen remained stable at 155.83 per dollar.
In the realm of cryptocurrencies, Bitcoin rose by 2.1% to $62,533.78, while Ether increased by 1.3% to $2,959.42.
Bond yields saw declines, with the yield on 10-year Treasuries dropping one basis point to 4.48%, Germany’s 10-year yield decreasing by one basis point to 2.50%, and Britain’s 10-year yield declining by one basis point to 4.15%.
Commodity prices showed West Texas Intermediate crude rising by 0.8% to $78.87 a barrel, while spot gold fell by 0.5% to $2,348.58 an ounce.
This article was produced with the assistance of Bloomberg Automation and contributions from Catherine Bosley and Alice Gledhill.