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The Monday Market Minute

  • Global stocks mixed as investors look to surging PMI data as bullish on growth prospects, while looking past inflation pressures ahead of the release of the Fed’s preferred measure on Friday. 
  • Commodity prices slide as China issues statement vowing “zero tolerance” on hoarding and monopolies amid its move to tame speculation in key markets. 
  • Bitcoin resumes its roller-coaster ride, slumping below $32,000 amid a China-lead crackdown on cryptocurrency mining, but rising past the $36,000 mark in early New York trading.
  • Benchmark 10-year note yields ease to 1.623% in overnight trading while the dollar index slips 0.05% to 89.986.
  • CDC data shows 130 million Americans have now been fully vaccinated against the coronavirus, with around 285.7 million doses administered as of Sunday.
  • U.S. equity futures suggest a firmer open heading into a muted week for earnings and data releases on Wall Street, with a focus on new homes sales Tuesday and the PCE index release on Friday.

Wall Street futures moved higher Monday, while the dollar languished near three months lows against its currency peers, as investors looked past inflation signals to focus on the strength of the global economic recovery and a pullback in commodity prices. 

U.S. economic activity surged at the fastest pace on record last month, according to a key reading of both the services and manufacturing sector published late last week by IHS Markit, with similar tallies reported from other major economies around the world.

Supply-chain bottlenecks, labor shortages and rising wages are adding to inflationary pressures and eroding some corporate profit margins, but investors appear soothed by the Federal Reserve’s pledge to continue buying $120 billion in government, corporate and agency bonds each month in order to keep market interest rates low while holding their benchmark lending rate in pace — at near zero percent — until at least early 2022. 

A weekend crackdown on commodity speculation in China, including a statement warnings of ‘zero tolerance’ from the National Development and Reform Commission, pared gains for copper and iron ore heading into the Monday session, although oil prices leaped more than $1 per barrel amid a bullish outlook on crude prices from bankers at Goldman Sachs.

Copper futures prices were marked below the $10,000 level on the London Metals Exchange, while aluminum fell 1.5% to $2,335 per ton. In Shanghai, nickel, zinc and iron ore were all notably lower on the session.

Friday’s release of the PCE deflator, the Fed’s preferred inflation gauge, will go some way towards defining the “transitory” nature of inflation pressures, which are running at an annual rate of 4.2%, with new homes sales and initial jobless claims highlighting a quiet week for earnings and data releases.

On the earnings front, with 95% of the S&P 500 reporting March quarter profits, collective earnings are forecast to rise 52% from last year to a share-weighted $411.6 billion, with a further 62.2% gain penciled in for the three months ending in June, thanks in part to accelerating re-openings, a vaccine rollout that’s put shots in the arms of 287 million Americans and the ongoing tailwind from President Joe Biden’s $1.9 trillion stimulus program.

Bitcoin prices were also active once again, slumping below the $32,000 mark Sunday as Chinese authorities added cryptocurrency mining to their list of prohibitions amid an intensifying crackdown on the digital currency space, although prices recovered to just over $36,000 in early New York trading.

With that backdrop, Wall Street futures suggest a reasonably firm start to the week, with contracts tied to the Dow Jones Industrial Average indicating a 130 point opening bell gain and those linked to the S&P 500 priced for an 18 point advance.

Nasdaq Composite futures, meanwhile, are indicating a 75 point opening bell gain, with benchmark 10-year Treasury note yields easing to 1.622% amid a sanguine reaction to last week’s inflation-laden PMI data.

In Europe, holiday closures in several markets kept trading muted Monday, although last week’s surging PMI data, as well as an improving vaccine outlook, has the Stoxx 600 trading 0.02% higher and within just a few points of the all-time high it reached last month. 

Overnight in Asia, Japan’s Nikkei 225 closed 0.17% higher at 28,364.61 points amid an intensifying debate over the wisdom of hosing the Olympic Games later this summer amid another uptick in coronavirus infections, while the region-wide  MSCI ex-Japan benchmark was last seen 0.17% lower heading into the final hours of trading.