Dow Futures Higher As Bond Markets Steady, Oil Retreats Below $60

U.S.  stocks could close out the week with modest gains as investors battle an inflation-fueled rally in commodity prices and mixed recovery signals from spending and employment data.
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The Friday Market Minute

  • Global stocks inch higher to close out a rough week for risk assets, with inflation concerns clipping equity gains around the world.
  • Commodity prices slip as investors take profits, pulling WTI crude $1.5 lower and taking copper down from its highest levels since 2012.
  • European data suggests a big rebound for factory activity in February, but services continue to suffer in the pandemic-gripped economy.
  • The U.S. dollar falls to 90.262 against a basket of its global peers, while benchmark 10-year Treasury bond yields hold at 1.303%
  • U.S. equity futures suggest a firmer open on Wall Street following stronger than expected first quarter earnings from Deere & Co. and ahead February PMI data at 9:45 am Eastern time.

U.S. equity futures edged higher Friday, putting Wall Street on pace to end the week with modest gains amid ongoing concerns for rising inflation that have hammered bond markets and blunted a stimulus-powered global stock rally. 

Stocks extended gains, as well, following a much stronger-than-expected first quarter earnings report from industrial equipment maker Deere & Co.  (DE) - Get Report, which boosted its full-year profit outlook on improving demand in a recovering global economy. 

Commodity prices and bitcoin gains have far outpaced stocks this week, while bond markets are off to their worst annual start since 2013, based on year-to-date returns for 30-yera Treasuries, as investors bet that President Joe Biden's $1.9 trillion COIVD relief bill will add upward pressure to consumer prices even as it lifts growth and employment prospects for the world's biggest economy. 

Profit-taking from some of those trades, however, looks to give stocks a solid end to the week, with oil slumping more than a $1.5 per barrel on reports that OPEC members may ease production curbs in April and the dollar falling 0.3% against a basket of its global peers following yesterday's disappointing reading of weekly jobless claims that point to ongoing weakness in the labor markets.

Mixed data from Europe, where a February reading of economic activity showed a big boost in factory output offset by still-soft services is adding to equity market sentiment Friday, although gains are likely to be modest and volumes below average, based on this week's market action.

Futures contracts tied to the Dow Jones Industrial Average suggest am 85 point opening bell gain, with those tied to the S&P 500 priced for a 15 point bump. Nasdaq Composite futures suggest a 75 point gain for the tech-focused benchmark to close out the week.

Uber Technologies  (UBER) - Get Report shares were a notable pre-market mover, falling 3.5% after the U.K. Supreme Court ruled that drivers must be considered employees of the ride-sharing app maker, and as such must be paid benefits and entitled holidays.

Benchmark 10-year bond yields continued to hover around the 1.3% mark in overnight trading, while the gap between returns on 2-year notes sits at 1.19%, the most since early 2017. 

Bitcoin prices jumped another 2% to trade at a fresh record high of $52,750, while the U.S. dollar index extended yesterday's declines -- the most since October -- to trade at 90.276.

Overnight market action saw modest gains for European stocks, with the Stoxx 600 rising 0.2% in Frankfurt, while Britain's FTSE 100 inched just 0.02% higher as the pound hit the 1.40 market against a weakened greenback for the first time in three years.

Asia stocks were similarly tepid, with only a modest advance for the region-side MSCI ex-Japan benchmark and a week ending .71% slide for the Nikkei 225 in Tokyo, which still managed to close over the 30 point mark after breaching that level for the first time in three decades earlier this week.