Dow Futures Earns with Strong Growth, Controlled Inflation and Surprising Earnings

Monday's market minute

• Global equities are trading higher as investors continue to bet on a Goldilocks scenario for the US economy and record gains for Wall Street.
• The Fed's preferred inflation gauge will be released at 8:30 am Eastern time today, and any slack in base prices could spur market bulls after the release of 3.2% of GDP stronger than expected from first quarter Friday to Friday
• The US earnings season is halfway to a 2.3% contraction in earnings, much better than 3.9% a few weeks earlier.
• World oil prices recede after President Trump's comments on OPEC and gas prices, but markets remain close to the six-month highs set by Iran's sanctions and tightening stocks .
• US equity futures suggest modest gains on Wall Street, ahead of today's inflation data and on the Fed's decision on Wednesday's rates, the S & A P 500 is about to reach new records.

Market overview

Global equities traded better on Monday as investors expected accelerated economic growth, stronger-than-expected corporate earnings and a potentially accommodative Federal Reserve will continue to push US stocks to new highs.

The faster-than-expected growth rate of the US economy (3.2% in the first quarter), combined with a surprisingly strong earnings outlook from some of the largest companies listed on Wall Street, would normally spur investors to protect against faster inflation.

However, with the Fed's preferred measure of consumer price hikes, the PCE deflator, which is expected to show a slight deceleration last month when it hits at 8:30 am Eastern today, markets are betting rather than the Fed's decision on Wednesday's rates could include a language that cement its dovish tilt. If this materializes and technology giants such as Google Alphabet (GOOGL – Get the Report) and Apple Inc. (AAPL – Get the Report) surprise, the S & P 500 could easily extend its recent record set and lead to the 3,000 mark in the coming weeks.

This potential allowed Asian and European equities to remain stronger in the overnight trading session, as the US dollar fell almost two years from its peak and oil prices continued to fall after the sharp sell off of oil. Friday, the MSCI excluding Japan index rising 0.5%, corporate profits in China rose for the first time in five months.

US futures announce modest gains on Wall Street ahead of PCE data at 8:30, as well as Google's after-the-bell results, with Dow Jones Industrial Averaging contracts showing a 12-point lead and those related to The S & P 500, which recorded two record breaking records last week, is expected to rise 0.42 points higher to start the trading week.

Apple publishes its second quarter results Tuesday with General Electric (GE – Get Report), General Motors (GM – Get Report), McDonald's Pfizer (PFE – Get Report) and Merck (MRK – Get Report) highlighting the most big day This week includes 164 updates – including five Dow components – highlighted by blues like CVS (CVS – Get Report), Eli Lilly (EL – Get a Report), Qualcomm (QCOM – Get a Report), Kraft Heinz (KHC – Get a Report), CBS Corp (CBS – Get the Report) and Dow (DOW Wednesday and Thursday).

In fact, with about half of the S & P 500 index returns so far this season, about 77% have exceeded earnings estimates, according to FactSet data, which has reduced 2.3% collective earnings compared to the same period last year. largely ahead of the contraction of 3.9% estimated a few weeks ago.

European stocks were better at the start of trading on Monday, although the Spanish benchmark IBEX fell into the red after the weekend elections that allowed Prime Minister Pedro Sanchez to retain power in the fourth-highest Great economy of the region, even though it did not win enough seats to command an absolute majority.

The Stoxx 600 index edged up 0.25% earlier this week, extending its gains from the 18-month highs on Friday as benchmarks in the region retreated amid mounting political uncertainty.

Italian markets also strengthened, as banks 'shares rose as a result of Standard & Poor's decision Friday to confirm its triple B rating on the heavily indebted economy, a decision that protects investors' positions. Italian government bonds in the European Central Bank. loan operations.

World oil prices prolonged overnight trading declines, after a sharp turnaround on Friday, following statements by President Donald Trump that he had "called on OPEC" to ask them to lower their oil prices. price.

"Gas prices are down," Trump told reporters over the weekend in Washington. "I called OPEC, I said you had to shoot them, you have to shoot them."

Oil has risen more than 40% since its lowest multi-year level on Christmas Eve, as prices are supported by OPEC's decision to extend production cuts of 1.2 million barrels a day. of the market in the second half of this year as well as sanctions on the sale of Iranian and Venezuelan crude by the United States.