(Bloomberg) — Stocks and US futures advanced Monday after China eased some virus curbs and Wall Street had its best week since November 2020.
European equities rose to the highest level in three weeks, trimming their monthly drop. Nasdaq 100 contracts climbed more than 1% and S&P 500 futures also gained in a sign the bounce may have further to run. The S&P 500 wiped out its May losses and snapped a string of seven weekly declines as institutional investors rebalanced portfolios into the end of the month.
Japanese and Hong Kong equities led gains in Asian stocks. China’s yuan outperformed after the nation reported fewer Covid-19 cases in Beijing and Shanghai. That spurred the government to ease some of the strict virus controls to stimulate sagging growth.
The dollar slipped for a third day versus major peers as havens lost their appeal amid the improved mood. Cash Treasuries weren’t trading because of the US Memorial Day holiday.
Oil climbed in response to the easing of Chinese lockdowns and as the European Union worked on a plan to ban imports of Russian crude.
Spanish inflation unexpectedly quickened, denting hopes that the euro zone’s record price surge has peaked and piling more pressure on the European Central Bank to act.
Read: Wild Five Months Leaves Wall Street Split on When Selloff Ends
Traders are pondering whether the bottom of the selloff is near as investors have been buying the dip after one of the worst starts to the year for equities. However, a wall of worries remains from hawkish central banks underscoring fears of a recession, escalating food inflation from the war in Ukraine and China’s lockdowns stunting economic activity.
“We are in the middle of a bear-market rally,” said Mahjabeen Zaman, Citigroup Australia head of investment specialists, said on Bloomberg Television. “I think the market is going to be trading range-bound trying to figure out how soon is that recession coming or how quickly is inflation going down.” She added that Treasury yields are set to peak this year.
Traders will be looking to the US payroll numbers later this week to gauge the Federal Reserve’s tightening path as it strives to rein in inflation. Meanwhile, the Fed is set to start shrinking its $8.9 trillion balance sheet starting Wednesday.
China in Danger of Exporting Fresh Inflation Turmoil: MLIV Pulse
Here are some key events to watch this week:
- US markets closed for Memorial Day Monday
- EU leaders start a two-day special meeting in Brussels Monday with the war in Ukraine, defense, inflation, energy and food security on the agenda
- China PMI Tuesday
- Euro zone CPI Tuesday
- The Federal Reserve is set to start shrinking its $8.9 trillion balance sheet Wednesday
- The Fed releases its Beige Book report on regional economic conditions Wednesday
- New York Fed President John Williams, St. Louis Fed President James Bullard speak at separate events Wednesday
- OPEC+ virtual meeting Wednesday
- Cleveland Fed President Loretta Mester discusses the economic outlook Thursday
- US May employment report Friday
- The UN’s Food and Agriculture Organization releases its monthly food price index at a time of maximum concern about global supplies on Friday
Some of the main moves in markets:
Stocks
- The Stoxx Europe 600 rose 0.7% as of 8:14 a.m. London time
- Futures on the Nasdaq 100 rose 1.4%
- Futures on the Dow Jones Industrial Average rose 0.6%
- The MSCI Asia Pacific Index rose 2%
- The MSCI Emerging Markets Index rose 2%
Currencies
- The Bloomberg Dollar Spot Index fell 0.2%
- The euro rose 0.2% to $1.0755
- The Japanese yen fell 0.1% to 127.25 per dollar
- The offshore yuan rose 0.9% to 6.6615 per dollar
- The British pound was little changed at $1.2632
Bonds
- Germany’s 10-year yield advanced six basis points to 1.02%
- Britain’s 10-year yield advanced five basis points to 1.97%
Commodities
- Brent crude rose 0.3% to $119.83 a barrel
- Spot gold rose 0.5% to $1,863.69 an ounce
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