US equity futures advance on Huawei reprieve; bonds mixed

Bloomberg

US equity futures and European stocks advanced on Tuesday following a mixed session in Asia as the trade-war driven turbulence that has dominated markets this month showed few signs of abating. The dollar strengthened while Treasuries slipped.
Contracts on the S&P 500, Dow Jones Industrial Average and Nasdaq 100 indexes all jumped in the wake of the US decision to grant limited relief for consumers and carriers using Huawei Technologies, a day after the White House’s moves against the Chinese telecom giant battered stocks.
Tesla Inc fell in pre-market trading as Morgan Stanley analysts slashed their worse-case scenario for the share price to just $10.
In Europe, technology shares powered the Stoxx 600 Index higher. Chinese equities had the strongest gains in the Asian session, while their Japanese peers ended lower. An advance for Samsung Electronics Co helped bolster Korean shares, on bets it may benefit from Huawei’s need to shift away from American suppliers.
Risk assets have been whipsawed in May as the world’s largest economies ratchet up both rhetoric and action on trade, with the latest phase focused on Huawei and its suppliers and customers. For all the turmoil a gauge of global stocks remains within 5 percent of an all-time high, while the S&P 500 is about 3 percent from a record. Against that backdrop investors will be closely watching a slew of US data this week as well as Federal Reserve policy-meeting minutes due on Wednesday.
“The world of G-10 believes that things get fixed. This is what economists tell them,
and so they do not see a reason to panic,” said Sebastien Galy, senior macro strategist at Nordea Investment Funds SA in Luxembourg.
Elsewhere, the pound reversed a drop ahead of UK Prime Minister Theresa May unveiling a new proposal for getting her Brexit deal through parliament.
Turkey’s lira stayed lower after the country’s central bank effectively lowered its main interest rate, undoing a limited tightening of policy.
The Fed minutes of its FOMC April 30-May 1 policy meeting will be released on Wednesday. Counting of votes from the Indian general elections takes place on Thursday as Prime Minister Narendra Modi attempts to secure a second term. ECB President Mario Draghi speaks in Frankfurt on Wednesday.
The European Parliament holds continent-wide elections May 23-26. On Thursday, the ECB publishes its account of the April monetary policy decision. Bank of England Governor Mark Carney’s planned appearance before parliament has been postponed.
The Stoxx Europe 600 Index gained 0.6 percent New York time. Futures on the S&P 500 Index gained 0.6 percent. The UK’s FTSE 100 Index increased 0.5 percent. Germany’s DAX Index gained 1 percent. The MSCI Emerging Market Index advanced 0.1 percent. The MSCI Asia Pacific Index decreased 0.4 percent, the lowest in almost four months.
The Bloomberg Dollar Spot Index increased 0.2 percent
to the highest in five months. The euro fell 0.1 percent to $1.1155, the weakest in more than three weeks. The British pound advanced 0.1 percent to $1.2739, the largest gain in more than two weeks. The Japanese yen decreased 0.4 percent to 110.53 per dollar.
The yield on 10-year Treasuries advanced two basis points to 2.43 percent, the highest in more than a week.
Germany’s 10-year yield gained two basis points to
-0.07 percent, the highest in more than a week on the biggest climb in more than three weeks. Britain’s 10-year yield advanced three basis points to 1.082 percent, the highest in a week on the largest gain in more than two weeks.