US futures, European stocks rise on earnings; dollar dips

Bloomberg

US futures rose with European stocks Tuesday as the prospect of solid corporate earnings helped counter concerns stemming from elevated inflation. Treasuries were steady and the dollar declined.
Travelers Cos. rose in pre-market trading, while Johnson & Johnson fluctuated after reporting. Technology shares rallied and crypto stocks were in the spotlight as Bitcoin continued its climb toward all-time highs before the launch of the first Bitcoin futures exchange-traded fund. Basic resources led an advance in Europe’s Stoxx 600 index and shares in Asia were little changed.
Oil gained as Russia signaled that it won’t go out of its way to offer European consumers extra gas to ease the current energy crisis unless it gets regulatory approval to start shipments through the controversial Nord Stream 2 pipeline. The London copper market remains in a historic squeeze, as a critical shortfall in available inventories drives prices to near-record levels and leaves buyers paying huge premiums for spot metal.
Markets are taking some comfort from robust earnings, but also grappling with the prospect of tightening monetary policy to quell price pressures. Traders are waiting to see if a slate of Federal Reserve speakers this week will try to calm the jitters stemming from the scaling back of pandemic-era policy support.
“The world is watching interest rates more closely than it has for some time— and rightly so, the moves have been emphatic, especially in the short-term maturities,” Chris Weston, head of research at Pepperstone Financial Pty, wrote in a note. He added it’s “impressive how resilient and calm markets are in the face of the rates repricing.”
Global bond yields were mixed and Australian bonds whipsawed after the central bank said it remains committed to maintaining highly supportive monetary conditions to bolster the economy.
Investors are paying close attention to the earnings season to see how higher costs for energy and raw materials are affecting margins.
Procter & Gamble fell in pre-market trading after reporting that rising commodity and freight costs are eroding profitability. In Europe, Ericsson AB’s sales were hit by supply chain issues and Danone SA said inflation could worsen next year, leading the company to shift price increases to consumers and seek more cost savings.
“We are going to get a lot of information on whether margins are being squeezed by these shortages and higher prices and wages continuing to go up,” JoAnne Feeney, Advisors Capital Management partner and portfolio manager, said on Bloomberg Television. She added the delta-plus Covid variant could be among sources of volatility in the next few months.
Meanwhile, China Evergrande Group’s onshore real-estate unit paid interest due Tuesday on a yuan bond, according to Reuters, as the beleaguered property developer continued to grapple with a debt crisis that’s threatening the outlook for Asia’s biggest economy.
Futures on the S&P 500 rose 0.4% as of 8:27 a.m New York time. Futures on the Nasdaq 100 rose 0.3%. Futures on the Dow Jones Industrial Average rose 0.4%. The Stoxx Europe 600 rose 0.2%. The MSCI World index rose 0.1%.
The Bloomberg Dollar Spot Index fell 0.3%. The euro rose 0.3% to $1.1649. The British pound rose 0.7% to $1.3822. The Japanese yen was little changed at 114.33 per dollar.
The yield on 10-year Treasuries was little changed at 1.61%. Germany’s 10-year yield advanced three basis points to -0.12%. Britain’s 10-year yield advanced two basis points to 1.15%.
West Texas Intermediate crude rose 0.8% to $83.06 a barrel. Gold futures rose 1% to $1,784.10 an ounce.