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US equity-index futures rose and a bond selloff stalled as some investors bet a period of disinflation has already begun and the midterm election results will be favourable to markets.
Contracts on the S&P 500 and Nasdaq 100 indexes added at least 0.4% each after dropping earlier. Most Treasuries erased losses, leaving only the two-year yield higher on the day. The dollar gave up its gains and oil pared losses. Facebook parent Meta Platforms Inc. advanced in New York premarket trading on plans for job cuts.
The risk-on shift after a weak European opening may signal a temporary win for bulls even as sentiment remains fragile ahead of US midterm elections and inflation report. JPMorgan Chase & Co. strategists said a potential peak in bond yields and “very downbeat†sentiment may support stocks. Investors can look forward to positive catalysts from the elections, Morgan Stanley said.
The bout of optimism outweighs, for the moment, the Federal Reserve’s resolute campaign against price surges, signs of stress in US corporate performance and China’s announcement it will “unswervingly†adhere to current Covid Zero policy.
Monday’s partial gains in Treasuries were underpinned by a 2-basis point drop in the 10-year yield. The two-year rate, more sensitive to monetary policy, remained higher around the 4.68% level. Europe’s equity benchmark, the Stoxx 600, rose for a second successive day and traded above its 100-day moving average.
US data — showing strong hiring and wage increases along with higher unemployment — offered a mixed picture for Fed officials debating how long to extend their campaign to curb elevated inflation.
Meanwhile, Apple Inc said it expected to produce at least three million fewer iPhone 14 handsets than originally anticipated this year, according to people familiar with its plans. Of the 430 companies in the S&P 500 that have reported quarterly earnings so far, almost a quarter have missed estimates.
Meta rallied 3.6% in early trading after a Wall Street Journal report that the company will fire thousands of workers.
Markets will watch the latest US inflation reading on Thursday after the core consumer price index rises more than forecast to a 40-year high in September. Even if prices begin to moderate, the CPI is far above the Fed’s comfort zone.
The Stoxx Europe 600 rose 0.5% as of 10:29 am London time and futures on the S&P 500 also climb 0.5%.
While futures on the Nasdaq 100 rose 0.4%, futures on the Dow Jones Industrial Average also gain 0.5%. The MSCI Asia Pacific Index rose 1.7% and the MSCI Emerging Markets Index also advances 1.7%.
While the Bloomberg Dollar Spot Index fell 0.2%, the euro rose 0.4% to $0.9992.
The Japanese yen was little changed at 146.59 per dollar and the offshore yuan fell 0.5% to 7.2208 per dollar. The British pound rose 0.7% to $1.1457.
Bitcoin declines 1.7% to $20,767.87 and ether also plunges 1.5% to $1,580.55.
—Bloomberg