Premarket boosts equity optimism; dollar rises
BNN Bloomberg
U.S. equity-index futures and the dollar rose as investors weighed the balance between central banks’ accommodative resolve and concerns over inflation. They awaited the latest U.S. jobs report before reassessing their rate-hike bets.
U.S. equity-index futures and the dollar rose as investors weighed the balance between central banks’ accommodative resolve and concerns over inflation. They awaited the latest U.S. jobs report before reassessing their rate-hike bets.
Futures on the S&P 500 and Nasdaq 100 indexes climbed 0.2 per cent each after Thursday’s records for equities. Pfizer Inc. jumped 11 per cent in New York premarket trading with its COVID-19 pill signaling a breakthrough in the fight against the pandemic. That added to optimism from earnings that buoyed the likes of Expedia Group Inc. and News Corp.
While markets had begun positioning for earlier-than-expected rate hikes, they got a jolt this week with the Federal Reserve, European Central Bank and the Bank of England all pushing back on those bets. The Fed did announce the start of stimulus tapering, but Chair Jerome Powell also signaled a commitment to support growth even at the risk of overheating.
“Powell doesn’t care -- he just wants to continue supporting the jobs market and the economic recovery despite the threatening rise in inflation,” Ipek Ozkardeskaya, a senior analyst at Swissquote, wrote in a note. “Interestingly, the Bank of England also refrained from raising rates yesterday. And you know who else doesn’t care about the energy crisis and the rising inflation? Well, it’s OPEC.”
Treasury yields in the two- and five-year maturities added two basis points each, while longer-term bonds were little changed. The moves came after a surprise BOE decision to hold interest rates on Thursday had spurred a global surge in bonds. Interest-rate futures had priced in two quarter-point Federal Reserve increases in 2022 but shifted the second one toward 2023.
Yet, equity bulls were out in full force Friday. Pfizer jumped after saying its COVID-19 pill reduced hospitalizations and deaths in high-risk patients by 89 per cent, a result that has the potential to alter the course of the pandemic. Rival Moderna Inc. fell 9 per cent.
