The Monday Market Minute

  • Global stocks trade higher  as investors continue to bet on a Goldilocks scenario for the U.S. economy and further record gains for Wall Street.
  • The Fed's preferred inflation gauge will be published at 8:30 am eastern today, with any slowing in core prices likely to boost market bulls following Fridays' stronger-than-expected first quarter GDP reading of 3.2%
  • US earnings season hits half-way mark with profits set to contract by 2.3%, much better than the 3.9% figure estimated just a few weeks ago.
  • Global oil prices retreat following President Trump's comments on OPEC and gas prices, but markets remain close to six months highs on Iran sanctions and tight supplies.
  • U.S. equity futures suggest modest gains on Wall Street ahead of inflation data today and the Fed's Wednesday rate decision, with the S&P 500 poised to push to fresh record highs.

Market Snapshot

U.S. equity futures traded higher Monday as investors extended bets that surging economic growth, stronger-than-expected corporate earnings and a potentially dovish Federal Reserve will continue to push U.S. stocks to fresh record highs.

The U.S. economy's faster-than-expected growth rate of 3.2% over the first quarter, coupled by a series of surprisingly solid profit outlooks from some of the biggest listed companies on Wall Street, would normally trigger moves by investors to hedge against faster inflation.

However, with the Fed's preferred measure of consumer price increases, the PCE deflator, showing a bigger-than-expected deceleration last month to 1.5% , markets are instead betting that the Fed's Wednesday rate decision could include langue that will cement its dovish tilt. If that comes to fruition, and earnings from tech giants such as Google parent Alphabet (GOOGL - Get Report) and Apple Inc. (AAPL - Get Report) surprise to the upside, the S&P 500 could easily extend its recent run of record highs and drive towards the 3,000 mark in the weeks ahead.

That potential kept stocks in Asia and Europe stronger in the overnight session, as the U.S. dollar retreated from near two-year highs and oil prices extended declines from Friday's sharp sell-off, with the MSCI ex-Japan index rising 0.5% as corporate profits in China expanded for the first time in five months.

U.S. equity future are pointing to modest gains on Wall Street ahead of the PCE data at 8:30 am, as well as Google's earnings after the bell, with contracts tied to the Dow Jones Industrial Averaging flat and those linked to the S&P 500, which recorded two record closing highs last week, expected to bump 0.1 point higher to start the trading week.

Apple reports its second quarter earnings on 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 biggest day of a week that includes 164 updates -- including five Dow components -- highlight by bluechips such as CVS (CVS - Get Report) , Eli Lilly (EL - Get Report) , Qualcomm (QCOM - Get Report) , Kraft Heinz (KHC - Get Report) , CBS Corp (CBS - Get Report) and Dow (DOW) on Wednesday and Thursday.

In fact, with around half of the S&P 500 reporting so far this season, around 77% have topped earnings estimates, according to FactSet data, putting collective earnings on track to shrink 2.3% contraction from the same period last year, a figure that is well ahead of the 3.9% contraction estimated just a few weeks ago.

Walt Disney Co. (DIS - Get Report) shares are set to open at an all-time high Monday as investors reacted to a recording-setting weekend at the box office for its blockbuster film "Avengers: Endgame."

European stocks were modestly weaker by mid-day in Frankfurt , with Spain's IBEX benchmark leading to the downside following a weekend election that saw Prime Minster Pedro Sanchez hold onto power in the region's fourth-largest economy, even as he failed to win enough seats to command an outright majority.

The Stoxx 600 index slipped 0.15% to kick off the week, paring gains from the 18-months highs it touched on Friday, as benchmarks around the region pulled back amid rising political uncertainty.

Markets in Italy were firmer, as well, as bank stocks gained following a move by Standard & Poor's on Friday to confirm its triple-B rating on the heavily-indebted economy, a decision which protects the standing of Italian government bonds in European Central Bank lending operations.

Global oil prices extended declines in overnight trading, following a sharp reversal of fortune Friday following comments from President Donald Trump that he had "called OPEC" to ask them to reduce prices.

"Gasoline prices are coming down", Trump told reporters over the weekend in Washington. "I called up OPEC, I said you've got to bring them down. You've got to bring them down."

Oil have gained more than 40% since hitting a multi-year low on Christmas Eve, with prices supported by OPEC's decision to extend production cuts, which take 1.2 million barrels from the market each day, into the second half of this year as well as sanctions on the sale of Iranian and Venezuelan crude by the United States.

Brent crude contracts for June delivery, the global benchmark for oil prices, were marked 9 cents lower from their Friday close in New York and changing hands at $72.05 per barrel while WTI contracts for the same month were seen 8 cents lower at $63.22 per barrel.

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