Senator Collins: The bipartisan deal will be released on Monday at the earliest.
US Commerce Secretary Raimondo: The United States is preparing plans to invest $52 billion in semiconductor supply.
ECB's President Lagarde: Inflation is expected to grow much more in the following months.
ECB Interest Rate Actual 0.00% vs Estimate 0.00% (Euro initially strengthened, then weakened)
The S&P 500 closed higher Thursday, after recovering intraday weakness supported by a bid up technology stocks amid falling Treasury yields following data showing a surprise rise in weekly jobless claims.
The S&P 500 rose 0.21%, the Dow Jones Industrial Average gained 0.07%, or 25 points, the Nasdaq was up 0.36%.
In the week ended July 17, initial jobless claims unexpectedly climbed by 51,000 to 419,000, a nine-week high, confounding economist estimates for a decline to 350,000. Still the move was largely brushed off by some economists, who see it as a one-off and expect the downward trend in claims to resume course.
“At this point, we're inclined to believe that this is once again a ‘one-off’ situation with this week's back-up in claims as demand for labor remains extremely strong and there is nothing that stands out to us as a reason to have expected layoff activity to rebound. We will be looking for claims to resume their downward trend next week,” Jefferies (NYSE:JEF) said in a note.
U.S. Treasury yields were on the back foot following the data, though recovered some losses intraday. Banks were hit hard amid the stumble in yields, but technology racked up gains as lower yields make longer duration, or investments that have a longer payback period, attractive.
People’s United Financial (NASDAQ:PBCT), M&T Bank (NYSE:MTB) and Charles Schwab Corp (NYSE:SCHW) were down more than 3%.
In large-cap tech, Microsoft (NASDAQ:MSFT) was in the spotlight, hitting a fresh 52-week high as investors piled into the stock ahead of the tech giant’s quarterly results slated for next week.
“We expect another ‘beat and raise’ special from Redmond with Azure growth numbers (45%+ YoY) that exceed whisper expectations and headline numbers that comfortably exceed the Street's $44 billion and $1.90 estimate,” Wedbush said in a note.
Facebook (NASDAQ:FB), Google-parent Alphabet (NASDAQ:GOOGL), Apple (NASDAQ:AAPL), and Amazon.com (NASDAQ:AMZN) were higher.
Energy was also a source of pain for the broader market, down nearly 1%, shrugging off rising oil prices amid weakness in Cabot Oil & Gas Corporation (NYSE:COG), Baker Hughes Co (NYSE:BKR) and Valero Energy Corporation (NYSE:VLO).
On the earnings front, Domino’s Pizza Inc (NYSE:DPZ) jumped more than 14% after the pizza chain delivered quarterly results that topped expectations on both the top and bottom lines, driven by its new menu items.
Southwest Airlines (NYSE:LUV) fell 3% as better-than-expected quarterly results were overshadowed by ongoing threat that rising Covid infections pose to travel demand.
European stock markets are seen opening in a mixed fashion Wednesday, stabilizing after the week’s volatile start with the earnings season continuing and ahead of a policy meeting by the European Central Bank.
At 2:10 AM ET (0605 GMT), the DAX futures contract in Germany traded 0.1% lower, while CAC 40 futures in France climbed 0.3% and the FTSE 100 futures contract in the U.K. rose 0.2%.
Stock indices in Europe closed higher Tuesday, with the DAX up 0.6%, the CAC 40 up 0.8% and the FTSE 100 0.5% higher, rebounding after Monday’s sharp losses after fears the recent surge of Covid-19 cases will derail the global economic recovery.
The story was similar on Wall Street, with the blue chip Dow Jones Industrial Average gaining around 550 points on Tuesday as investors reassessed Monday’s slump of more than than 700 points.
While the uncertainty caused by the increase of global coronavirus injections, caused mainly by the highly-transmissible delta variant, remains, investors are also turning their eyes towards the quarterly earnings season.
Julius Baer (SIX:BAER) is likely to be in the spotlight Wednesday after the Zurich-based wealth manager posted a 23.4% rise in half-year net profit to 606.0 million Swiss francs ($657.9 million), while drugmaker Novartis (SIX:NOVN) beat expectations for its second-quarter profit while keeping its 2021 guidance.
On the flip side, German auto maker Daimler (OTC:DDAIF) said that the global semiconductor chip shortage will continue to affect its business in the second half of 2020 and that its third-quarter car sales will be the same or below the second quarter.
Additionally, the European Central Bank starts a two-day meeting on Wednesday, after raising their inflation goal to 2% earlier this month. President Christine Lagarde recently raised interest when she promised “interesting variations and changes” to Thursday’s policy announcement and her press conference.
Elsewhere, oil prices continued to weaken Wednesday following a surprise increase in U.S. crude stockpiles last week, at a time when rising Covid-19 infections threaten the demand outlook.
U.S. crude stocks increased by 0.81 million barrels for the week ended July 15, the American Petroleum Institute reported late Tuesday, which would be the first build since May, if confirmed by the Energy Information Administration later Wednesday.
Crude prices have sold off sharply in recent days, after climbing to their highest levels since 2014 earlier this month, as Covid-19 cases spread into the U.S. and Europe from Asia.
At 2:10 AM ET, U.S. crude futures traded 0.5% lower at $66.86 a barrel, while the Brent contract fell 0.5% to $69.01. Both contracts are around 8% lower this week to date.
Additionally, gold futures rose 0.1% to $1,812.60/oz, while EUR/USD traded 0.1% lower at 1.1763.
SHANGHAI (Reuters) - Asian shares and U.S. Treasury yields rose on Wednesday, clawing back some of the week's losses as investors reassessed economic worries, but the dollar was firm on concerns over the impact of a fast-spreading coronavirus variant.
Rising COVID-19 infections have rocked global markets this week as investors dumped risk assets, seeking stability in safe haven assets like bonds. That sent stocks tumbling and pushed the benchmark U.S. 10-year yield to five-month lows on Tuesday.
But on Wednesday, MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.17%, trimming its losses for the week to around 2%, while Japan's Nikkei rose 0.90% after touching six-month lows a day earlier.
Sentiment in Japan was supported by a jump in exports in June, led by U.S. demand for cars and China-bound shipments of chip-making equipment, boosting hopes for an export-led recovery.
Australian shares were up 1.21%, Chinese blue-chips added 0.76% and Taiwan shares rose 0.27%.
Seoul's KOSPI slipped 0.14% as South Korea reported a daily record of novel coronavirus cases.
"The level of volumes, the level of sporadic whip-saw price action I think is telling you that there's not a lot of conviction one way or another," said Kay Van-Petersen, global macro strategist at Saxo Capital Markets in Singapore.
But while he said peak global growth had likely passed, easy central bank policies continue to provide strong support for global asset prices even as they begin to flag the tapering of asset purchases.
"The G4 central banks' balance sheets have been compounding by 15% since 2008. And my point is that's not going to stop. It's not going to get shut off."
On Tuesday, the Dow Jones Industrial Average rose 1.62% to 34,511.99 points, the S&P 500 gained 1.52% to 4,323.06 and the Nasdaq Composite added 1.57% to 14,498.88.
The rise in share market gauges in Asia on Wednesday was matched by a fall in U.S. Treasuries prices, with the 10-year yield rising to 1.2202% from the previous day's close of 1.209%. The 2-year yield was at 0.2036%, up from a close of 0.194%.
But pointing to persistent worries around the impact of a surge in global COVID-19 infections, the dollar stayed near three-month highs on Wednesday.
"While some of the world is shrugging off rising infections as vaccination rates limit the severity of any symptoms of new cases, there are few parts of the world that can totally ignore this," said Rob Carnell, Asia-Pacific chief economist at ING.
The dollar index edged up 0.07% to 93.030, with the euro down 0.07% to $1.1771. The dollar was 0.05% stronger against the yen at 109.90.
Oil prices resumed falls after a rebound on Tuesday, with U.S. crude down 0.4% at $66.93 per barrel and Brent at $69.12, down 0.33% on the day.
Spot gold shed 0.21% to $1,806.24 an ounce.
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The S&P 500 rebounded Tuesday, recovering from the prior-day rout as bargain-seeking investors piled into beaten down cyclical stocks amid a rebound in U.S. bond yields.
The S&P 500 rose 1.7%, the Dow Jones Industrial Average gained 1.7%, or 584 points, the Nasdaq was up 1.8%.
The United States 10-Year yield rose above 1.2% after dropping to 1.14% earlier in the session, providing a much needed boost to financials, mostly bank stocks following Monday's selloff.
JPMorgan (NYSE:JPM), Goldman Sachs (NYSE:GS) and Bank of America (NYSE:BAC) rose more than 2%.
The selloff on Monday was largely attributed to fears that a resurgence in Covid-19 infections would stall the recovery. Others, however, suggest the selloff was also likely driven by investor positioning.
"Although, with the economic recovery more than solid and nominal case numbers still extremely restrained, the drop-off is also likely a reflection of 'positional issues' in the market, as one news outlet described it," Stifel said.
But some on Wall Street suggest the economy has transitioned from a recovery stage to an expansion phase.
"The most visible signs of the transition have been the return of inflation-adjusted output in June to pre-pandemic levels; productivity-enhancing investment in high-tech equipment; broadening loan growth beyond consumers to businesses; and strong job gains as businesses gained renewed confidence," Wells Fargo (NYSE:WFC) said in a note.
Energy also recovered some of its losses from a day earlier, up more than 2% amid a tentative rebound in oil prices as the delta wave threatens demand.
"Our bottom-up estimate of the impact that a Delta wave could have on global demand instead points to a potential 1 million-barrel-a-day hit for only a couple months, and even less if vaccines prove effect at lowering hospitalizations in DMs, the origin of most summer demand improvements," Goldman Sachs said.
Energy was given an added boost from a 3% surge in Halliburton (NYSE:HAL) as the oil services company reported results that topped market expectations.
Technology stocks also benefited from dip-buying, with Apple (NASDAQ:AAPL), in the ascendency, up more than 2%
UBS lifted its price target on Apple to $166 from $155, after raising estimates on tech giant's revenue and EPS for the third quarter to $74.7 billion and $1.01 from $71.3 billion and 95 cents, respectively.
Microsoft (NASDAQ:MSFT, Facebook (NASDAQ:FB), Google-parent Alphabet (NASDAQ:GOOGL), and Amazon.com (NASDAQ:AMZN) were higher.
International Business Machines (NYSE:IBM) rose 2% after its second-quarter results topped analysts estimates.
"We’re encouraged by momentum around our wider hybrid cloud thesis," Credit Suisse (SIX:CSGN) said in a note as it raised its price target on IBM to $167 from $165.
European stock markets are seen edging higher at the open Tuesday, stabilizing after Monday’s rout on concerns that the resurgence of Covid cases will derail the global economic recovery.
At 2:05 AM ET (0605 GMT), the DAX futures contract in Germany traded 0.4% higher, CAC 40 futures in France climbed 0.4% and the FTSE 100 futures contract in the U.K. rose 0.4%.
Stock indices in Europe closed sharply lower Monday, with the DAX down 2.6%, the CAC 40 down 2.5% and the FTSE 100 2.3% lower, amid fears the latest surge of Covid-19 cases, led by the highly contagious delta variant, will prompt governments to resume tight lockdowns and curb economic activity.
The news was no better on Wall Street, with the blue chip Dow Jones Industrial Average dropping more than 700 points, while Asia Pacific stocks were mostly down on Tuesday, continuing their losses from a day earlier.
These markets had rallied strongly in the first half of the year as investors bet that the rollout of Covid-19 vaccination programs would help economies to recover strongly as mobility restrictions were lifted. However, the increase in new cases, firstly in Asia but increasingly in Europe and the U.S., has changed that narrative.
Helping the tone Tuesday was the news that UBS (NYSE:UBS) reported a 63% jump in quarterly net profit to $2 billion, up from the $1.23 billion reported for the same period last year, helped by what the Swiss banking giant described as “favorable” market conditions.
LVMH (PA:LVMH) will also be in the spotlight Tuesday after the French luxury group said it had agreed to buy a 60% stake in the luxury streetwear brand Off-White, while earnings updates come from Volvo (ST:VOLVb), Ubisoft (PA:UBIP) and easyJet (LON:EZJ).
On the economic data front, the Eurozone current account data for May is scheduled later Tuesday, but most eyes will be on German producer prices for June given the recent concerns about the rise in inflation globally.
Elsewhere, oil prices edged higher Tuesday, steadying after the previous session’s sharp selloff on the back of worries that increased Covid cases will hit the short-term demand for energy just as a group of top producers agreed to increase supply.
Investors now await U.S. crude oil supply data from the American Petroleum Institute, due later in the day.
By 2:05 AM ET, U.S. crude futures traded 0.9% higher at $66.95 a barrel, after dropping more than 7% Monday, their worst session since September, while the Brent contract rose 0.7% to $69.07, after falling 6.8% to an eight-week low.
Additionally, gold futures rose 0.4% to $1,816.35/oz, while EUR/USD traded 0.1% lower at 1.1784.
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On Monday, US equities futures plummeted and European markets headed for a seven-week low as the spread of the delta variant around the world threatens the global economic recovery.
The S&P 500 slumped Monday, led by a rout in energy and financials as investors grew concerned over the global recovery following a surge infections brought on by the Delta variant.
The S&P 500 fell 1.6%, the Nasdaq was down 1.1%. and the Dow Jones Industrial Average fell 2.1%, or 726 points, though was down 953 points at the lows of the day.
"A plethora of macro uncertainty is now in investor crosshairs including pandemic / variant spread; reflation / inflation; future of CB policy; earnings; and geopolitical tensions (watch the ongoing escalation between U.S. & allies against China)," Mark Luschini, chief Investment strategist at Janney Montgomery Scott said in a note.
New coronavirus cases climbed in all 50 states on Sunday for the fourth day in a row on a rolling seven-day average, a rise not seen since the spring 2020 surge, Stifel said, citing Johns Hopkins University data. The spike in the US follows rising infections globally including in the UK.
"The Delta variant of the coronavirus has now spread to more than a hundred countries. The way it is spreading, it will soon become the most dominant strain globally," Dr. Poonam Khetrapal Singh, regional director of the World Health Organization - South-East Asia said. The Delta variant has reportedly reached the UK, US, Singapore and many other nations."
This backdrop of worries has muddied the outlook for growth, prompting a sharp decline in Treasury yields, and pressuring cyclical stocks including financials and energy.
Energy fell more than 3% as U.S. oil prices dropped 7.5% below $70 level after OPEC and its allies agreed to lift output at time when the delta Covid variant casts doubt on global demand.
The fears on Wall street underscored by a jump in the VIX – or so-called fear index - to a two-month high.
Financials, meanwhile, were pressured by a the fall in U.S. bonds yields, with the 10-year Treasury diving below 1.2% to hit fresh February lows.
JPMorgan (NYSE:JPM), Goldman Sachs (NYSE:GS) and Bank of America (NYSE:BAC) were in the red.
Lower interest rates hurt banks' net interest margin – the difference between the interest income generated by banks and the amount of interest paid out to their lenders.
Megacap tech was no exception to the selloff, though fared somewhat better relative to beaten down cyclical stocks.
Facebook (NASDAQ:FB), Google-parent Alphabet (NASDAQ:GOOGL), Apple (NASDAQ:AAPL), and Microsoft (NASDAQ:MSFT, Amazon.com (NASDAQ:AMZN) were more than 1% lower.
A sea of red also washed over travel-related stocks, with airlines and cruise stocks sharply lower amid fears rising infections threaten travel demand.
United Airlines Holdings (NASDAQ:UAL), American Airlines (NASDAQ:AAL), Boeing (NYSE:BA) were hit hard, with the latter down more than 5%. While Carnival (NYSE:CCL) slumped 6%.
Fears that some restrictions could return, however, proved a boon for the stay-at-home stocks.
Teladoc Inc (NYSE:TDOC) was up 3%, while Peloton (NASDAQ:PTON) and DoorDash (NYSE:DASH) rose 7% and 5%. Zoom Video Communications (NASDAQ:ZM) proved an exception, however, falling about 2% after buying cloud contact center software Five9 in an all-stock transaction that valued the company at $14.7 billion.
European stock markets are seen opening lower Monday, with continuing concerns over rising numbers of Covid-19 cases globally weighing on sentiment. Oil prices are also falling as producers agree to increase output.
At 2:05 AM ET (0605 GMT), the DAX futures contract in Germany traded 0.4% lower, CAC 40 futures in France dropped 0.8% and the FTSE 100 futures contract in the U.K. fell 0.6%.
Asia has been the main battleground for the latest surge of Covid-19 cases, with many countries in the region struggling to curb the highly contagious delta variant of the coronavirus.
That said, a number of European countries, including France, the Netherlands, Greece and Spain, announced new restrictions last week in a bid to curb a rise in infections - although the French government has backtracked on plans for sweeping new rules to expand the use of vaccination certificates after massive protests at the weekend.
England is lifting its restrictions Monday, including social distancing rules and limits on social gathering, even as the number of its recorded Covid cases tops 50,000 a day and senior members of the government are forced to self-isolate.
Staying in Europe, the destruction caused by massive flooding around Germany and Belgium over the last few days could also weigh on sentiment this week.
The economic data slate is pretty empty in Europe Monday, but investors will cautiously await Thursday’s meeting of the European Central Bank, with the Governing Council expected to announce revamped guidance on its future policy.
In corporate news, the luxury goods sector will be in the spotlight Monday after the Financial Times reported that Italian fashion group Ermenegildo Zegna has agreed to go public by combining with the special-purpose acquisition company, New York-listed Investindustrial Acquisition Corp., resulting in an enterprise value of $3.2 billion.
Elsewhere, oil prices weakened Monday after a group of top producers agreed over the weekend to boost output, overcoming an internal spat that threatened the stability of the market.
The group, which includes members of the Organization of the Petroleum Exporting Countries and allies like Russia, agreed to add 400,000 barrels a day every month from August 2021 onwards, with Saudi Arabia, the United Arab Emirates, Iraq, Kuwait and Russia also receiving higher baselines against which their output cuts are measured from May 2022.
At 2:05 AM ET, U.S. crude futures traded 0.9% lower at $70.89 a barrel, while the Brent contract fell 0.7% to $73.06.
Additionally, gold futures fell 0.3% to $1,809.85/oz, while EUR/USD traded marginally lower at 1.1803.