U.S. Stock Futures Rise as Stimulus Talks Weighed: Markets Wrap


(Bloomberg) — U.S. equity futures climbed after the White House appeared to shift tack and signaled the Trump administration is again leaning toward a large-scale stimulus bill. The dollar fell.

S&P 500 contracts were about 0.6% higher following news that Treasury Secretary Steven Mnuchin told Nancy Pelosi that President Donald Trump wants agreement on a comprehensive aid package. Shares in Japan and Australia dipped, while rising in Hong Kong. Chinese equities advanced as markets reopened after a week-long holiday. The offshore yuan climbed following a stronger-than-anticipated daily currency fixing.

The U.S. benchmark earlier closed up despite conflicting comments from Trump and Pelosi that whipsawed markets. Gains for crude oil eased as Hurricane Delta approached the already battered Louisiana coast. Treasuries ticked higher and gold climbed.



chart: MSCI gauge of global equities heads for best week since early July


© Bloomberg
MSCI gauge of global equities heads for best week since early July

Global equities are edging back toward last month’s all-time high and are having the best week since the start of July with investors increasingly betting that a Joe Biden victory in the November election and gains by Democrats in Congress will support stocks. The scenario seems to be somewhat quelling volatility even as risks from a split in government to a resurgence of coronavirus cases threaten the economic rebound. Trump’s doctor said he expects the president to safely return to public engagements by Saturday following treatment for Covid-19.

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We are seeing “an increasing probability of, let’s call it, the blue wave,” Abby Joseph Cohen, senior investment strategist at Goldman Sachs Group Inc., said on Bloomberg TV. That “might not be such a bad thing, because that would give us more certainty with regard to policy, particularly with the use of fiscal policy to help our economy at this point.”

Prospects for an agreement on a stimulus package in Washington remain uncertain after Trump pulled his negotiators out of talks on a comprehensive deal Tuesday, leaving some investors doubting progress will be made prior to next month’s presidential election.

“We are pretty skeptical that you’ll see anything before the election,” Libby Cantrill, head of public policy at Pacific Investment Management Co., said on Bloomberg TV. “We probably won’t see any additional support for the economy until January 2021 maybe at the earliest.”

Elsewhere, Eaton Vance Corp. jumped after the investment firm agreed to be taken over by Morgan Stanley. IBM surged after saying it will spin off its infrastructure unit.

These are the main moves in markets:

Stocks

S&P 500 futures advanced 0.6% as of 12:10 p.m. in Tokyo. The gauge rose 0.8%.Japan’s Topix index lost 0.5%.Hong Kong’s Hang Seng rose 0.1%.Shanghai Composite gained 1.8%.Australia’s S&P/ASX 200 Index added 0.2%.Euro Stoxx 50 futures rose 0.3%.

Currencies

The Bloomberg Dollar Spot Index fell 0.2%.The yen was at 105.85 per dollar, up 0.2%.The offshore yuan rose 0.5% to 6.7045 per dollar.The euro bought $1.1779, up 0.2%.

Bonds

The yield on 10-year Treasuries was about one basis lower at 0.78%.Australia’s 10-year yield dipped to 0.85%.

Commodities

West Texas Intermediate crude slid 0.3% to $41.08 a barrel.Gold advanced 0.9% to $1,911.24 an ounce.

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