Stocks, Futures Climb; Dollar Dips With Treasuries: Markets Wrap

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(Bloomberg) — U.S. futures rose Monday along with stocks in Europe as concerns about China’s wealth crackdown faded and traders took advantage of last week’s selloff to pick up equities at favorable valuations. Bonds declined as demand for havens eased.

Contracts on the S&P 500 and Nasdaq 100 rose after the underlying indexes started to rebound late last week. The Stoxx Europe 600 index climbed for a second day, with luxury stocks leading the advance. Retailers outperformed after a report of a takeover bid for J. Sainsbury Plc sent the grocer’s shares up more than 11%.

Treasury yields rose along with those on core European bonds, and the dollar slipped for the first day in six. Investors are looking ahead to the Jackson Hole symposium Thursday, which may offer insights into how and when the Federal Reserve plans to taper bond purchases.

Some of the recent weakness in commodities abated, with oil in New York pushing toward $64 a barrel. Commodity-linked currencies like the Australian dollar and South African rand strengthened. Bitcoin retook $50,000 for the first time since mid-May.

The dip-buying suggests investors have faith in central banks to maintain stimulus amid lingering risks to the global economy. Euro-area purchasing managers’ indexes on Monday signaled a strong recovery, though factories continue struggle with supply bottlenecks and rising input costs, while the virus resurgence casts a pall on the outlook. Traders will scrutinize U.S. manufacturing, gross domestic product and jobs data this week as they wait for further guidance from the Fed at Jackson Hole.

“We do not expect much of ‘breaking news’ to come from the Jackson Hole symposium, but rather some form of relief that the policy course remains lower for longer,” said Daniel Egger, the CIO at St. Gotthard Fund Management. “There appears to be growing consensus that the Fed will tread very cautiously in this regard.”

Dallas Fed President Robert Kaplan said he’s open to adjusting his view that the Fed should start tapering its asset-purchase program sooner rather than later if the delta strain persists and hurts economic progress. Treasury Secretary Janet Yellen endorsed Jerome Powell for a second term as Fed chair, a move that could reduce uncertainty about the path for monetary policy.

On the the virus front, China once again squelched local Covid-19 cases down to zero. Australia and New Zealand are reviewing their strategies of eliminating infections. Australian Prime Minister Scott Morrison said it’s highly unlikely his country will ever return to zero cases.

Here are some events to watch this week:

U.S. Markit manufacturing PMI and existing home sales MondayBank of Korea policy decision; briefing by Governor Lee Ju-yeol ThursdayFed officials attend the Jackson Hole Economic Policy Symposium from Thursday through SaturdayU.S. GDP, initial jobless claims ThursdayJuly U.S. personal income and spending data Friday. Investors will scrutinize the personal consumption expenditures price index, an inflation measure closely watched by the Fed.

For more market analysis read our MLIV blog.

Some of the main moves in markets:

Stocks

Futures on the S&P 500 rose 0.3% as of 6:49 a.m. New York timeFutures on the Nasdaq 100 rose 0.3%Futures on the Dow Jones Industrial Average rose 0.4%The Stoxx Europe 600 rose 0.4%The MSCI World index rose 0.4%

Currencies

The Bloomberg Dollar Spot Index fell 0.2%The euro rose 0.2% to $1.1719The British pound rose 0.4% to $1.3671The Japanese yen fell 0.3% to 110.08 per dollar

Bonds

The yield on 10-year Treasuries advanced two basis points to 1.28%Germany’s 10-year yield advanced three basis points to -0.47%Britain’s 10-year yield advanced three basis points to 0.55%

Commodities

West Texas Intermediate crude rose 2.9% to $63.97 a barrelGold futures rose 0.4% to $1,790.70 an ounce

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