U.S. futures rise with Europe stocks; gold jumps

Frankfurt (Jan 4)  U.S. equity futures rose with European stocks as upbeat manufacturing data and rising commodities prices boosted risk appetite on the first trading day of 2021.

The Stoxx Europe 600 Index climbed more than 1.5 per cent, led by economically-sensitive sectors like mining and travel, after data showed euro-area manufacturing grew the fastest in more than 2 1/2 years in December. Contracts on the S&P 500 Index pointed to further gains after the benchmark closed at a record high.

Commodities got a boost from the weakest dollar since 2018, with gold climbing around 2 per cent and copper and nickel extending their gains into the new year. Crude oil futures in New York edged higher as OPEC+ was set to meet on Monday. Treasuries dropped.

Magellan Health Inc. jumped in pre-market trading after Centene Corp. agreed to acquire it in a US$2.2 billion deal.

Equities are beginning the new year at rich valuations amid expectations that widespread vaccine distribution in 2021, central bank support and government aid will reignite economic growth and boost corporate profits. Purchasing managers indexes showed factory activity across Asia continued to gain momentum in December, spurred by strong demand for the region’s exports, though China’s recovery is starting to moderate.

“Covid cases and vaccine distribution will remain the key focus for investors for now,” said Kerry Craig, global market strategist at JPMorgan Asset Management. “Without the wide distribution of vaccines, the paths of Covid and the economy are locked together, given the impact on social mobility and economic curtailment. This link will be broken as immunity levels rise into the middle of the year, but until then the economic path will be bumpy over the first quarter.”

Elsewhere, Bitcoin sank as much as 17 per cent in the biggest intraday retreat since March, wiping out gains made over the weekend.

On the coronavirus front, global infections climbed above 85 million, after U.S. daily cases soared to a record of nearly 300,000 after the New Year holiday. The U.K. is poised to give the first shots of the vaccine from AstraZeneca Plc and the University of Oxford on Monday, in a race against a faster-spreading variant that’s prompted new lockdowns across much of the country.

What to watch this week:

•OPEC+ alliance energy ministers hold their monthly virtual gathering Monday to decide whether to add as much as 500,000 barrels a day to production.

•In the U.S. Tuesday, the state of Georgia holds a run-off election for two U.S. Senate seats that will decide control of the chamber.

•U.S. Congress meets to count electoral votes and declare the winner of the 2020 Presidential election Wednesday.

•FOMC minutes out Wednesday.

•U.S. unemployment report for December is due Friday.

These are the main moves in markets:

Stocks

•Futures on the S&P 500 Index climbed 0.6 per cent as of 6:45 a.m. New York time.

•The Stoxx Europe 600 Index surged 1.7 per cent.

•The MSCI Asia Pacific Index increased 0.9 per cent.

•The MSCI Emerging Market Index gained 1.1 per cent.

Currencies

•The Bloomberg Dollar Spot Index sank 0.5 per cent.

•The euro jumped 0.7 per cent to US$1.2296.

•The British pound was little changed at US$1.3676.

•The onshore yuan strengthened 1 per cent to 6.464 per dollar.

•The Japanese yen strengthened 0.4 per cent to 102.84 per dollar.

Bonds

•The yield on 10-year Treasuries gained one basis point to 0.92 per cent.

•The yield on two-year Treasuries dipped less than one basis point to 0.12 per cent.

•Germany’s 10-year yield decreased four basis points to -0.61 per cent.

•Britain’s 10-year yield fell three basis points to 0.171 per cent.

•Japan’s 10-year yield was unchanged at 0.021 per cent.

Commodities

•West Texas Intermediate crude gained 1.1 per cent to US$49.05 a barrel.

•Brent crude gained 1.6 per cent to US$52.65 a barrel.

•Gold strengthened 1.9 per cent to US$1,934.77 an ounce.

Bloomberg