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Dow Futures Higher on Blowout China GDP Data; Corporate Earnings Beats

China's record first quarter growth has world stocks testing fresh all-time highs Friday as U.S. markets continue to power ahead on corporate earnings and recovery bets.

The Friday Market Minute

  • Global stocks hit a fresh record high after blowout data from China, and yesterday's stronger-than-expected retail sales and jobs figures from the U.S., cement the case for a surging post-pandemic recovery.
  • China expands at a first quarter clip of 18.3%, the fastest on record, as March retail sales rise more than 30% from last year's pandemic-depressed levels.
  • Benchmark 10-year note yields ease to a five-week low of 1.529% in overnight trading amid a puzzling pullback in Treasury yields that belies the underlying improvements in economic data.
  • CDC data shows 78.5 million Americans have now been fully vaccinated against the coronavirus, with around 198.3 million doses administered as of Wednesday.
  • U.S. equity futures suggest a firmer open on Wall Street following first quarter earnings from Morgan Stanley and better-than-expected March housing starts data.

U.S. equity future moved higher Friday, following the first-ever close over 34,000 for the Dow, as investors continued to digest a steady stream of positive corporate and economic data while tracking a puzzling pullback in Treasury yields.

First-quarter GDP data from China was added to the mix Friday, with the world's second-largest economy roaring back to life with a record 18.3% expansion over the first three months of the year. 

Coupled with better-than-expected readings for March retail sales and factory output, the figures put China firmly on pace to match its 2021 growth estimates while powering the region's broader post-pandemic recovery. 

China's impressive first-quarter performance followed a much stronger-than-expected reading for U.S. retail sales last month, rapidly improving jobless claims figures and manageable levels of consumer price inflation.

The latter, in fact, could be the trigger for a sharp pullback in Treasury bond yields, as a rally in prices Thursday that extended into overnight trading pulled 10-year notes to a five-week low of 1.528%. 

However, with faster inflation a near arithmetic certainty over the coming months, lawmakers debating another $2 trillion infrastructure spending bill and consumers preparing to re-enter the retail economy as the vaccine rollout accelerates, the current low-yield environment remains somewhat of a mystery.

It did help stocks to a record close last night, however, and futures suggest most of those gains will hold heading into the start of a Friday session highlighted by first-quarter earnings from Morgan Stanley  (MS) - Get Morgan Stanley Report and housing starts data for the month of March.

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Contracts tied to the Dow Jones Industrial Average suggest a modest 100-point opening bell gain for the 30-stock average, while those linked to the S&P 500 are pricing in a 10-point gain for the broader benchmark. 

Morgan Stanley, in fact, blasted first quarter earnings forecasts thanks in part to record wealth management inflows, sending its shares 0.4% higher in pre-market trading.

Nasdaq Composite futures, meanwhile, were set to add around 20 points to last night's rally as 10-year note yields creep higher following China's blowout GDP and retail sales data. 

DraftKings shares were a notable pre-market mover on the tech-focused index, rising more than 4% after agreeing a sports betting partnership with the NFL.

The dollar index, which tracks the greenback against a basket of six global currencies, remains caught in a downdraft that's lasted for most of the past two weeks, helping oil prices bump higher for a fifth consecutive session amid renewed energy demand bets.

WTI crude for May delivery was marked 11 cents higher in overnight trading at $67.15 per barrel while Brent contracts added 22 cents to $63.57 per barrel. 

In Europe, the Stoxx 600 hit a fresh all-time high of 489.24 points in early Frankfurt trading, boosted by a stronger-than-expected first quarter profit estimate from luxury carmaker Daimler AG and March inflation data that was largely in-line with economists forecasts of 1.3%, and well shy of the European Central Bank's 'just below 2%' target.

Overnight in Asia, China's data boosted lifted the region-wide MSCI ex-Japan index to a 0.42% gain on the session, paced by advances in Hong Kong and Shanghai, while Japan's Nikkei 225 closed out the week with a modest 0.14% gain to peg the benchmark at 29,683.37 points.

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