US Futures Extend Gains On Powell Fed Appointment: Markets End

This content was published on November 22, 2021 – 2:06 PM

(Bloomberg) – US equity futures extended gains and Treasuries stretched losses on news President Joe Biden was due to appoint Jerome Powell for a second term as head of the Federal Reserve.

S&P 500 contracts rose 0.4% at 9:01 am in New York. The two-year Treasury yield jumped to 0.55%. Gold fell more than 1%. The appointment maintains consistency at the U.S. central bank as the country grapples with the fastest inflation in decades and the lingering effects of Covid-19. Biden had envisioned between Powell and Lael Brainard, whom he appointed to become vice president.

Stocks rose overnight due to a flurry of potential trades. Vonage Holdings Corp. jumped more than 20% Ericsson agreed to buy it. Telecom Italia SpA jumped 30% in Europe after KKR & Co’s offer. European stocks fell as concerns mounted that a resurgent pandemic would hamper economic recovery.

U.S. stocks are trading at record highs, outperforming the rest of the world as investors see few alternatives amid rising inflation and a lingering pandemic undermining the global recovery. Concerns about high valuations and the possibility that the economy could spin too quickly under the effect of accommodative monetary and fiscal policies halted, but did not stop the recovery.

The resilience of the US market contrasted with growing concerns in Asia and Europe, where the continued spread of Covid-19 threatened to lead to more economic closures and undermine a fragile recovery. The MSCI Asia-Pacific Index fell to a one-week low despite gains in mainland Chinese stocks.

The European Stoxx 600 gauge wiped out the gains after German Chancellor Angela Merkel called for tighter Covid-19 restrictions and said the latest increase in Covid cases was worse than anything Germany had experienced.

As global markets remained on the edge amid pandemic concerns and expectations of a faster-than-expected decline from the Federal Reserve, Monday brought some comfort to traders as China’s central bank abandoned a language that prevented political accommodation.

The Hungarian forint plunged to a record low against the euro amid a resurgence of the pandemic in Europe and mounting tensions on the Ukrainian border outweighing consecutive rate hikes from the central bank.

For more market analysis, read our MLIV blog.

Here are some key events from this week:

  • PMI data for the euro zone and the United States on Tuesday
  • Reserve Bank of New Zealand rate decision Wednesday
  • US FOMC minutes, consumer income, wholesale inventories, new home sales, GDP, initial jobless claims, US durable goods, University of Michigan consumer sentiment. Every Wednesday
  • Bank of Korea policy decision Thursday
  • Thanksgiving in the United States: US stocks and bond markets closed on Thursday
  • Bank of England Governor Andrew Bailey chats with Mohamed El Erian at a Cambridge Union event. Thursday

Some of the main movements in the markets:

Actions

  • S&P 500 futures rose 0.4% at 9:01 a.m. New York time
  • Futures on the Nasdaq 100 rose 0.4%
  • Futures contracts on the Dow Jones Industrial Average rose 0.2%
  • The Stoxx Europe 600 is down 0.2%
  • The MSCI World index fell by 0.2%

Currencies

  • The Bloomberg Dollar Spot Index changed little
  • The euro fell 0.1% to $ 1.1274
  • The British pound was little changed at $ 1.3441
  • The Japanese yen fell 0.1% to 114.12 per dollar

Obligations

  • The yield on 10-year treasury bills rose four basis points to 1.58%
  • German 10-year rate rose two basis points to -0.32%
  • UK 10-year yield rose two basis points to 0.90%

Merchandise

  • West Texas Intermediate crude little changed
  • Gold futures fell 0.6% to $ 1,843.60 an ounce

© 2021 Bloomberg LP


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