Stock Futures Build on S&P 500’s Record Advance: Markets Wrap

(Bloomberg) — European and US stock futures rose, extending the rally in global equities that pushed the S&P 500 Index to a record-high Friday.

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The contracts climbed in Asia after a gain in tech shares boosted the S&P 500 past 4,800 last week amid optimism over expected Federal Reserve interest-rate cuts and the artificial-intelligence boom. Chinese stocks bucked the trend as pessimism over the nation’s faltering recovery fueled further losses.

“We are heading into environment where the economic slowdown seems to be more of a soft landing, at the same time we are talking about rate cuts,” said Jun Bei Liu, a fund manager at Tribeca Investment Partners in Sydney. “All of that together does look pretty positive for the equity market.”

After hitting a low in October 2022, the S&P 500 has surged about 35% and topped its previous closing high of 4,796.56 on Friday. The gauge became the last of the three major US equity benchmarks to close at a record.

Asia’s benchmark stock index erased earlier gains as the Hang Seng Index dropped 3% and benchmark indexes in mainland China fell. China’s commercial lenders kept their benchmark lending rates unchanged Monday, in line with the central bank’s decision last week to refrain from cutting borrowing costs.

The current low valuations in Chinese stocks are not enough to encourage investors to jump back into the markets, said Vasu Menon, investment strategy managing director at Oversea-Chinese Banking Corp. in Singapore. “Our suspicion is that they will provide more stimulus, but the question is whether it’s going to be sizable enough to appease the markets,” he said about Chinese policymakers.

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Oil fell as OPEC member Libya restarted output at its largest field, bolstering global supplies and overshadowing for now concerns about tensions in the Red Sea that look set to continue disrupting shipping.

The dollar weakened versus most of its Group-of-10 peers, slightly paring gains made earlier this month. Treasuries edged higher, with benchmark 10-year yields dropping one basis point. Benchmark notes had gained Friday as a “Fed-friendly” survey from the University of Michigan showed a mix of high consumer confidence and lower inflation expectations.

This week investors will set their sights on the Bank of Japan, which started a two-day policy meeting Monday. The central bank is overwhelmingly forecast to leave its settings unchanged on Tuesday when it announces the results of its gathering.

Also in focus is Thursday’s first estimate of US fourth-quarter GDP, central bank meetings for Canada and Europe, along with South Korean economic output data and European initial readings of purchasing managers’ surveys of 2024.

Elsewhere, Ron DeSantis dropped out of the the US presidential race to endorse Republican front-runner Donald Trump ahead of the New Hampshire primary on Tuesday.

Key events this week:

• US Conference Board leading index, Monday

• Bank of Japan rate decision, Tuesday

• Eurozone consumer confidence, Tuesday

• Netflix Inc. to report earnings; the streaming service is set to post a strong finish to 2023, Tuesday

• Japan trade, Wednesday

• Eurozone S&P Global Services & Manufacturing PMI, Wednesday

• UK S&P Global / CIPS Manufacturing PMI, Wednesday

• US S&P Global Services & Manufacturing PMI, Wednesday

• Tesla Inc., International Business Machines Corp. (IBM) to report earnings, Wednesday

• European Central Bank rate decision, Thursday

• Germany IFO business climate, Thursday

• US GDP, initial jobless claims, durable goods, wholesale inventories, new home sales, Thursday

• LVMH, Northrop Grumman Corp., SK Hynix Inc. to report earnings, Thursday

• Japan Tokyo CPI, Friday

• Bank of Japan issues minutes of policy meeting, Friday

• US personal income & spending, Friday

• In China, the holiday rush starts ahead of next month’s Lunar New Year, Friday

Stocks

• S&P 500 futures rose 0.2% as of 7:02 a.m. London time. The S&P 500 rose 1.2% on Friday

• Nasdaq 100 futures rose 0.6%. The Nasdaq 100 rose 2%

• Euro Stoxx 50 futures rose 0.6%

• Japan’s Topix index rose 1.4%

• Hong Kong’s Hang Seng Index fell 2.7%

• China’s Shanghai Composite Index fell 2.7%

• Australia’s S&P/ASX 200 Index rose 0.7%

Currencies

• The Bloomberg Dollar Spot Index was little changed

• The euro was little changed at $1.0902

• The Japanese yen was little changed at 148.09 per dollar

• The offshore yuan was little changed at 7.2053 per dollar

• The Australian dollar fell 0.2% to $0.6585

• The British pound was little changed at $1.2708

Cryptocurrencies

• Bitcoin fell 1.4% to $41,158.99

• Ether fell 1.8% to $2,427.22

Bonds

• The yield on 10-year Treasuries was little changed at 4.12%

• Japan’s 10-year yield declined 1.5 basis points to 0.650%

• Australia’s 10-year yield declined six basis points to 4.23%

Commodities

• West Texas Intermediate crude fell 0.4% to $73.13 a barrel

• Spot gold fell 0.5% to $2,019.38 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Garfield Reynolds.

(An earlier version of this story was corrected to fix reference to Lunar New Year in key events list)

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