US futures jump as China bets calm cautious mood

Bloomberg

US equity futures rise as Chinese signals for possible easing measures outweighed concern over virus curbs in Europe. European stocks were boosted by deal activity.
December contracts on the S&P 500 and Nasdaq 100 Index rise 0.3% each after a cautious week that saw the benchmark gauge underperform the technology measure. Telecom Italia SpA jumped as much as 30% after KKR & Co. bid for the company. Two-and five-year US government bond yields rise at least two basis points each. The dollar held steady, while oil erased losses.
US stocks are trading near record levels, outpacing the rest of the world, as investors see few alternatives amid rising inflation, bouts of a selloff in bonds and a persistent pandemic that undermines global recovery. Even as sentiment
remains on the edge amid
expectations for a quicker-than-expected tapering by the Federal Reserve, Monday brought some cheer to traders as China’s central bank dropped language that precluded policy accommodation.
Investors are also focusing on whom President Joe Biden will pick as the Fed chair nominee from Governor Lael Brainard and incumbent Jerome Powell. Whoever is chosen may have their work cut out: US inflation is surging at the fastest pace in decades and expectations for price growth are at the highest since 2013.
A trio of Fed policy makers — Vice Chairman Richard Clarida, Governor Christopher Waller and St. Louis Federal Reserve Bank President James Bullard — have signaled that the topic of a faster taper might be on the table when the Federal Open Market Committee meets in December.
“What we are likely to see this week is more Fed members socialising that idea of a more rapid QE taper,” Jason Schenker, president and chief economist at Prestige Economics, said on Bloomberg Television. “If that idea gets out there and is repeatedly underscored, that will increase the probability that the tapering that’s announced in December will be quicker than the pace that was announced early in November.”
Europe’s Stoxx 600 gauge advanced for the first time in three days as deal activity helped to allay some of the concerns surrounding the spread of Covid-19. Telecommunications shares were the best performing group, with Telecom Italia gaining from private-equity firm KKR’s $12.2 billion bid for the company.
Equities outperformed on Monday in South Korea — aided by robust export data — and climbed in China, whose central bank signalled possible easing to support a slowing economy.
Treasuries were mixed and the gap between yields on five-year and 30-year maturities was around the lowest since March 2020. Risk aversion has bolstered bonds as surging European infections push Austria towards a lockdown and spur Germany to tighten curbs. The curve flattened in part on signs that the
Fed may consider a faster drawdown of its bond-buying
program to fight inflation.
The Stoxx Europe 600 rises 0.4% as of 8:38 am London time and futures on the S&P 500 also climb 0.3%.
While futures on the Nasdaq 100 rise 0.3%, futures on the Dow Jones Industrial Average also rise 0.4%. The MSCI Asia Pacific Index falls 0.3% and the MSCI Emerging Markets Index also drops 0.4%.
The Bloomberg Dollar Spot Index was little changed and the euro falls 0.2% to $1.1269.
While the Japanese yen falls 0.1% to 114.15 per dollar, the offshore yuan rises 0.2% to 6.3787 per dollar and the British pound falls 0.2% to $1.3427.