US equity futures rose, signaling gains for major indexes in early August as investors rejoice in strong earnings growth.
Futures contracts linked to the S&P 500 rose 0.5% on Monday. The gauge of US large-cap stocks closed its sixth consecutive monthly advance on Friday, although stock prices have occasionally faltered in recent weeks.
Investors are optimistic that the economic expansion will boost corporate earnings and allow stocks to continue to rise, albeit at a slower pace. Some fear that the highly contagious Delta strain of the coronavirus, a prolonged period of inflation and China’s efforts to curb tech companies could lead to bouts of volatility.
“There are a few good reasons why the economy will continue to grow at above-normal rates,” said Edward Smith, co-chief investment officer of UK investment firm Rathbone Investment Management. Consumers are spending freely, businesses are planning to invest in their businesses, and businesses are restocking their inventory, he said.
“This should allow earnings momentum to remain strong through the end of the year,” said Smith.
Among individual stocks, Square fell 4.9% before the opening bell. The payment company has agreed to buy Afterpay in Australia, which allows users to pay for goods in interest-free installments, in a stock purchase deal worth around $ 29 billion .
Investors said sentiment in the broader markets was boosted by comments from the Chinese securities regulator. The China Securities Regulatory Commission has said it will cooperate with Washington on U.S. listings, after the Securities and Exchange Commission said it will increase oversight of Chinese companies that aim to sell shares in the United States.
“Chinese and American regulators will continue to improve communication with the principle of mutual respect and cooperation, and properly deal with the issues related to the supervision of China-based companies listed in the United States,” a door told reporters. – speech of the CSRC, according to a press release. transcript posted on the regulator’s website on Sunday.
The comments appear to have supported Asian markets after a few turbulent weeks. The Shanghai Chinese Composite Index rose nearly 2% at the close of trading, while Japan’s Nikkei 225 climbed 1.8% and Hong Kong’s Hang Seng rose 1.1%.
Progress towards adopting an infrastructure spending program in Washington has also boosted global markets, said Lars Skovgaard Andersen, investment strategist at Danske Bank Wealth Management. Senators on Sunday completed construction of a roughly $ 1 trillion infrastructure bill, rushing to get it through the House by the end of the week and send it to the House. .
In the bond market, the yield on 10-year Treasury bills fell to 1.231% from 1.239% on Friday. Bond yields and prices move in opposite directions.
Oil prices have been under pressure after data signaling a slowdown in Chinese manufacturing activity. The private indicator suggested that activity fell to a post-Covid-19 low in July as heavy flooding, a resurgence of Covid cases and power cuts plummeted production and new orders.
Futures on Brent crude, the benchmark in international energy markets, fell more than 1% to $ 74.41 a barrel.
The Stoxx Europe 600 rose 0.4%, led by actions of retailers and basic resource companies.
Among individual stocks, Allianz fell more than 7% after the German insurer said earnings could be affected by investigations into its Structured Alpha funds, which have been linked to losses for investors during the market downturn in the market. early 2020.
British aerospace, defense and energy engineering firm Meggitt jumped 56% after agreeing to a £ 6.3bn takeover, equivalent to around $ 8.8 billion, by Parker Hannifin.
Parker Hannifin shares slipped 1% in pre-market US trading.
Write to Joe Wallace at [email protected]
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