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(Bloomberg) – US futures have fallen as investors look to the second-quarter earnings season starting this week to determine whether corporate profitability can support equity valuations. Treasury yields have fallen.
The Stoxx Europe 600 fluctuated before falling, with declines by banks and commodity producers offset gains by real estate companies and utilities. S&P 500 contracts fell, while Nasdaq 100 contracts were slightly lower
Treasuries resumed their gains after breaking an eight-session rally on Friday. They will remain focused amid the new supply hitting the market this week, along with key US inflation data and the semi-annual appearance of Federal Reserve Chairman Jerome Powell before Congress. The dollar rose slightly against its major peers.
Stocks and bonds rallied amid falling long-term interest rates and inflation expectations as central banks do not rush to withdraw the support that contributed to the recovery from the pandemic . Nonetheless, investors remain concerned about the spread of the delta variant and slowing vaccination rates, while questioning when the Fed will start to gradually reduce stimulus.
“There seems to be a complacency that Goldilocks is not only alive and well, but growing stronger by the day,” Simon Ballard, chief economist of First Abu Dhabi Bank, told Bloomberg Television. “Unfortunately, we have to recognize that in the future, the longer rates stay where they are, the more we look at going down, the more severe and acute the reaction could be.”
Elsewhere, Asian stocks rose earlier in the week after China’s central bank moved to increase liquidity by reducing the amount of liquidity most banks need to keep in reserve to support economic growth.
The euro was little changed after European Central Bank President Christine Lagarde asked investors to prepare for new guidance on monetary stimulus in 10 days. Oil extended a decline after its first weekly loss in seven years amid an OPEC + dispute over an increase in production.
For more market commentary, follow the MLIV blog.
Here are some events to watch this week:
Bank of America, BlackRock, Citigroup, Goldman Sachs, JPMorgan, Morgan Stanley are among the companies starting the profit season in the United States. A closely watched measure of inflation – the June US Consumer Price Index – will offer a snapshot of inflationary pressures on Tuesday Reserve Bank of New Zealand’s latest interest rate policy on Wednesday Bank of Korea Thursday China’s second-quarter GDP, key economic indicators Thursday Federal Reserve Chairman Jerome Powell appears before the Senate Banking Committee to present the biannual monetary policy report to Congress on Thursday Bank of Japan Friday
Here are some of the main movements in the financial markets:
Actions
S&P 500 futures fell 0.3% at 8:44 a.m. London time Nasdaq 100 futures were little changed Dow Jones Industrial Average futures fell 0.4 % Stoxx Europe 600 fell 0.3% MSCI World index rose 0.2%
Currencies
Bloomberg Dollar Spot Index rose 0.1% Euro was little changed at $ 1.1872 British pound fell 0.2% to $ 1.3873 Japanese yen was little changed at 110.12 for a dollar
Obligations
The 10-year Treasury bill yield fell three basis points to 1.33% Germany’s 10-year yield fell one basis point to -0.31%
Merchandise
West Texas Intermediate crude fell 0.8% to $ 73.98 per barrel Gold futures fell 0.4% to $ 1,802.80 per ounce
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