US futures catch risk-on wave; dollar retreats: markets wrap

US equity futures jumped as risk appetite returned to markets roiled in recent weeks by concerns about global economic growth, surging prices and policy tightening. Treasury yields rose and the dollar retreated.

Contracts on the S&P 500 bounced back after a Wall Street drop, while futures on the tech-heavy Nasdaq 100 climbed more than 2% before paring the advance. Citigroup Inc. rose 5.5% in premarket trading Warren Buffett’s Berkshire Hathaway took a stake in the lender. Tech names including Advanced Micro Devices Inc. Tesla Inc. and Nvidia Corp. were among the biggest premarket gainers.

Technology and basic-resources stocks led a broad-based advance of the Stoxx Europe 600 following a rally in Chinese tech shares on optimism Beijing may ease up on a yearlong clampdown. Equities were also buoyed by data showing the euro-area economy expanded more than initially estimated at the start of the year as the region moved past a wave of Covid-19 infections and defied headwinds from the early days of the war in Ukraine.

A challenging global economic outlook amid elevated food and fuel costs and tightening monetary settings continues to shape sentiment.  Oil has jumped to about $114 a barrel and an index of agricultural prices is at a record high. But one bond-market measure — the five-year breakeven rate — is signaling inflation has peaked, while the latest virus developments raised hopes China’s damaging lockdowns may soon be eased.

“Investors’ appetite for riskier assets is on the rise after many welcomed today’s positive unemployment and GDP figures” from the eurozone and UK, said Pierre Veyret, an analyst at ActivTrades Plc. “The improving virus situation in China is also blowing a wind of relief in investors’ trading minds.”

Bond yields across Europe rose, with the 10-year UK rate climbing as much as 10 basis points as traders added tightening bets after strong jobs data. The pound strengthened more than 1% to a two-week high against the dollar.

An Asian share index rose for a third day — its longest winning streak since mid-March — amid a jump in some technology firms and as investors assessed China’s efforts to stamp out Covid. A meeting Tuesday between the nation’s top regulators and corporate giants raised hopes the battered tech sector is near a turning point.

Meanwhile, Shanghai reported three days of zero community transmission, a milestone that could lead officials to start unwinding a punishing lockdown. Flareups elsewhere in China showed how hard it is to tackle the omicron strain.

Cryptocurrencies weathered the latest stablecoin turbulence, with Bitcoin rising above the $30,000 mark.

New York Fed President John Williams on Monday downplayed deteriorating liquidity conditions in financial markets, saying it was to be expected as investors grapple with uncertainty over global events and shifting US monetary policy. Fed speakers including Chair Jerome Powell are due to speak later Tuesday.

What to watch this week:

• Fed Chair Jerome Powell among slate of Fed speakers Tuesday
• Reserve Bank of Australia releases minutes of its May policy meeting Tuesday
• G-7 finance ministers and central bankers meeting Wednesday
• Eurozone, UK CPI Wednesday
• Philadelphia Fed President Patrick Harker speaks Wednesday
• China loan prime rates Friday

Some of the main moves in markets:

Stocks

• Futures on the S&P 500 rose 1.5% as of 7:04 a.m. New York time
• Futures on the Nasdaq 100 rose 1.8%
• Futures on the Dow Jones Industrial Average rose 1.3%
• The Stoxx Europe 600 rose 1.5%
• The MSCI World index rose 0.7%

Currencies

• The Bloomberg Dollar Spot Index fell 0.6%
• The euro rose 0.8% to $1.0518
• The British pound rose 1.2% to $1.2466
• The Japanese yen fell 0.2% to 129.36 per dollar

Bonds

• The yield on 10-year Treasuries advanced four basis points to 2.92%
• Germany’s 10-year yield advanced nine basis points to 1.02%
• Britain’s 10-year yield advanced 10 basis points to 1.82%

Commodities

• West Texas Intermediate crude rose 0.7% to $114.96 a barrel
• Gold futures rose 0.7% to $1 827.20 an ounce