Stock futures rise ahead of Federal Reserve decision

US equity futures showed moderate gains for major indices ahead of a busy week of central bank decisions in major economies.

Futures for the S&P 500 rose 0.2% on Monday, after the benchmark gauge closed last week at its 67th high of 2021. Contracts for the Dow Jones Industrial Average, which sits just below from an all-time high, rose 0.1%. Futures on the Nasdaq-100 rose 0.4%, signaling a good start to the week for tech stocks.

Moderna shares rose 1.3% in pre-market trading, making the vaccine maker one of the top-performing stocks on the S&P 500 along with rival Pfizer. Anthony Fauci, chief medical adviser to President Biden, urged Americans to get a Covid-19 booster on Sunday, while the British government said it plans to offer a booster to every adult in England by the end of the year.

Also ahead of the bell, Arena Pharmaceuticals climbed 93% after the company said it would be bought by Pfizer in a deal valuing it at $ 6.7 billion. AEA-Bridges Impact rose 4.6% after Harley-Davidson announced that its electric vehicle division planned to go public as part of a merger with the specialist acquisition company.

In the bond market, the yield on benchmark 10-year Treasury bills fell to 1.469% on Monday from 1.487% on Friday. Yields move in the opposite direction to bond prices.

While the cost of groceries, clothing, and electronics rose in the United States, prices in Japan remained low.

Investors are on the lookout for a Federal Reserve monetary policy decision and announcements from the Bank of England, European Central Bank and Bank of Japan later in the week. The Fed is expected to step up the pace at which it is cutting its bond buying program and signal that it will raise interest rates next year to curb inflation. Data released on Friday showed that consumer prices rose in November at the fastest annual rate since 1982.

Gregory Perdon, Co-Director of Investments at Arbuthnot Latham,

said he expects stocks to continue rising even if the Fed tightens monetary policy.

“The classic textbook would be rates going up, inventory going down,” Mr. Perdon said. “The reality is that there is so much liquidity out there, there is so much demand for a return on assets that we will eventually have to have a much more aggressive tightening to bring stocks down.”

Inflation hit a nearly four-decade high in November.


Photo:

Justin Lane / Shutterstock

The Organization of the Petroleum Exporting Countries said part of the recovery in oil consumption the cartel predicted this year will shift to early 2022 due to the Omicron variant. Futures contracts on Brent, the benchmark in international energy markets, fell 0.4% to $ 74.89 per barrel.

Natural gas prices in Europe and the UK jumped more than 10% on Monday after Germany’s new foreign minister questioned the imminent start of a controversial pipeline from Russia, adding to concerns of traders about the limited supply of fuel for heating and power generation. US natural gas futures rose 2.6% to $ 4.03 per million UK thermal units.

The Turkish lira fell 1.7% to 14.12 per dollar ahead of a rate cut expected by the central bank on Thursday. The Central Bank of the Republic of Turkey has bowed to pressure from President Recep Tayyip Erdogan to reduce borrowing costs this year in the face of rapid inflation, which is hitting the currency hard.

Overseas stock markets were mixed. The Stoxx Europe 600 rose 0.4%, led by stocks of basic resources, autos and tech companies. Among individual movers, Vifor Pharma jumped 20% after the Swiss pharmaceutical company said it was in talks to be taken over by Australian CSL. THG shares fell 5.9%, taking the UK e-commerce firm’s losses this quarter to 64%.

Japan’s Nikkei 225 rose 0.7%, the Shanghai Composite Index rose 0.4%, and the Hong Kong Hang Seng slipped 0.2%.

Write to Joe Wallace at [email protected]

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