Earnings lift US stock market, trade jolts currencies

Bloomberg

US stock futures jumped as blue chips from Caterpillar Inc. to McDonald’s Corp. reported results. Canada’s dollar led export currencies lower as a tariff on lumber reignited concern the Trump administration will pursue protectionist policies.
Futures on the Dow Jones Industrial Average rallied, indicating the underlying index may rise to an all-time high. Caterpillar climbed more than 6 percent in premarket trading, while McDonald’s added 2 percent. Stocks in Europe hovered near a 20-month high and emerging markets climbed, as risk appetite fueled by France’s election continued. The yen fell with Treasuries and gold. The Canadian dollar tumbled after Donald Trump slapped a 24 percent tariff on imported softwood lumber.
Investor focus shifted to US corporate earnings, where Caterpillar’s outlook underpinned speculation that the world’s largest economy remains poised to accelerate growth. Trump’s decision to impose a fresh tariff rekindled protectionist concern a day before his administration is set to unveil a broad outline for a reduction in corporate taxes. Shares in Europe rose as political risk abated, though tensions around North Korea continued to simmer.
“Attention will fast move over to Washington with the outline of the Trump tax plan likely tomorrow, the need to avoid the shutdown on Friday and the end of the first 100 days of Trump on Saturday” with the White House determined that higher growth can offset tax cuts, Jim Reid, a strategist at Deutsche Bank AG in London, wrote in a note.
Alphabet Inc., Microsoft Corp., Amazon.com Inc., Twitter Inc., Intel Corp., Credit Suisse Group AG, Barclays Plc, Bayer AG, Daimler AG and Total SA are among major companies releasing results this week. The Bank of Japan is widely expected to keep the settings on its monetary easing program unchanged at the end of a two-day policy meeting on Thursday.
Though inflation remains well below the central bank’s 2 percent target, it’s ticking up. The European Central Bank sets monetary policy later that same day. With officials indicating little chance of a policy change, the focus will be on any signals from President Mario Draghi that the ECB is starting to discuss an exit from its extraordinary stimulus. US GDP is due at the end of the week. It’s projected to show the economy expanded at a 1.0 percent annualized rate in the first quarter, the weakest pace in a year.
Futures on the Dow rose 0.8 percent as of 9:04 a.m. in New York. The index sits 1.7 below its all-time high. S&P 500 Index futures added 0.4 percent. The Stoxx Europe 600 Index gained 0.5 percent. The gauge jumped 2.1 percent to the highest since August 2015 on Monday. Stocks in Japan and Hong Kong led a rally in Asia, jumping more than 1 percent. China equities climbed from a three-month low on speculation that a selloff over concerns of a regulatory crackdown were overdone. Australia and New Zealand were closed for Anzac Day.
The euro rose 0.2 percent to $1.0893 after touching the highest level in five months on Monday.