US futures surge with stocks as dollar retreats, oil climbs

Bloomberg

Stocks and US futures rise on Tuesday as optimism that economic re-openings will boost growth outweighed concern about a pick-up in virus cases in parts of Asia. The dollar dipped and oil rises.
The Stoxx Europe 600 Index climbed back towards a record reached last week, while contracts on the Nasdaq 100 Index led gains in US futures after tech shares slid. Asian equities also rallied, with Taiwan’s benchmark outperforming after a recent rout as the country’s financial stabilisation fund said it was monitoring stocks and data showed foreign investors had continued buying during the selloff.
The dollar falls towards a four-month low, while US 10-year Treasuries were steady as investors awaited key housing data ahead of minutes due on Wednesday from the Federal Reserve’s last meeting. Brent crude topped $70 a barrel in London for the first time since mid-March on signs that reopenings are boosting demand.
Stocks have been volatile after climbing to a record in early May as investors assessed the prospects of economic expansion against a resurgence in coronavirus cases in countries including India. With rising inflation expectations stoking concern about policy tightening, traders will also parse the Fed minutes for any discussion about accelerating price pressures, and hints of a timeline for reducing asset purchases.
Fed Vice Chair Richard Clarida said during a webinar that the weaker-than-expected April payroll report shows “we have not made substantial further progress” on the central bank’s goals for employment and inflation laid out as thresholds to begin scaling back the central bank’s massive monthly bond purchases.
“Hotter inflation has materialised and market volatility is rising as the economic restart gathers pace,” according to BlackRock Investment Institute strategists lead by Jean Boivin. “This is playing out in line with our view that the economy is in a ‘restart.’ We prefer to look through any volatility and see a later ‘lift-off’ from zero rates than markets expect. This means higher-than-expected inflation in the medium term, and underpins our pro-risk stance.”
Elsewhere, Bitcoin fluctuated following a volatile weekend that saw comments from Tesla Inc’s Elon Musk whipsaw prices. Coinbase Global Inc falls to a record low and below the reference price used in its April direct listing.
Gold traded near its highest in almost four months. Asian copper miners advanced as they may benefit from tighter regulations and higher taxes that could hit top producer Chile.
Meanwhile, euro-area finance ministers and central bank chiefs will hold an informal meeting and a larger group of EU finance ministers and central bank chiefs will meet on May 22.
Futures on the S&P 500 Index climbed 0.4% as of 8:36 am London time and the Stoxx Europe 600 Index increased 0.7%.
While the MSCI Asia Pacific Index increased 1.7%, the MSCI Emerging Market Index gained as much as 1.5%.
The Bloomberg Dollar Spot Index falls 0.3% and the euro advanced 0.4% to $1.2196.
While the British pound advanced 0.4% to $1.4196, the onshore yuan strengthened 0.2% to 6.428 per dollar and the Japanese yen strengthened 0.2% to 108.99 per dollar.
The yield on 10-year Treasuries declined less than one basis point to 1.65% and the yield on two-year Treasuries was unchanged at 0.15%.
While Germany’s 10-year yield advanced one basis point to -0.11%, Britain’s 10-year yield jumped two basis points to 0.883% and Japan’s 10-year yield increased less than one basis point to 0.086%.
West Texas Intermediate crude gained 1% to $66.92 a barrel and Brent crude gained by around 1% to $70.15 a barrel. Gold strengthened 0.2% to $1,869.94 an ounce.