European Stock Futures Higher; Stimulus Passage and Falling Yields Help

This post was originally published on this site – European stock markets are seen opening higher Monday, boosted by progress in the passage of a huge U.S. stimulus package, a semblance of calm in global bond markets and more positive news of Covid-19 vaccines.

At 2:05 AM ET (0705 GMT), the DAX futures contract in Germany traded 0.8% higher, CAC 40 futures in France climbed 0.7% and the FTSE 100 futures contract in the U.K. rose 0.5%.

Sentiment has turned positive in equity markets around the globe, and Europe is no exception, as government bond yields have stabilised after last week’s sharp gains. Stocks had been under pressure as rising yields made equities look less attractive to investors, particularly the richly valued high-growth stocks which have powered a lot of the sharp gains from last year’s lows.

Yields on the benchmark U.S. 10-year notes traded last at 1.40%, below last week’s peak of 1.61%, while yields on European government bonds have also retreated from Friday’s highs.

Helping the tone has been the passage of the $1.9 trillion Covid relief bill through the U.S. House of Representatives on Saturday, it now heads to the Senate, and Johnson & Johnson’s one-shot vaccine receiving American authorization over the weekend.

Back in Europe, there is a raft of manufacturing PMI data due for release later Monday, which will provide clues as to how this sector is holding up as large parts of the continent are still locked down to combat the spread of the coronavirus. 

The equivalent news out of Asia was mixed earlier Monday, as Japan’s factory activity expanded at the fastest pace in over two years in February, while Chinese factory activity grew at the slowest pace in nine months. While analysts noted that the figures were distorted by the timing of the Lunar New Year holiday, it was the index’s third straight monthly drop. 

Turning to the European corporate sector, Logitech (NASDAQ:LOGI) is likely to be in the spotlight as the computer goods maker warned about its fiscal 2022 outlook as the pandemic-driven work-from-home boost lessens.

AstraZeneca (NASDAQ:AZN) could also be in focus after The Times newspaper reported that the drug maker has sold its 7.7% stake in Moderna (NASDAQ:MRNA) for more than $1 billion after the U.S. biotechnology company’s stock soared on the back of the delivery of its Covid-19 vaccine.

Oil prices pushed higher Monday, with traders expecting future demand growth on the back of the U.S. stimulus package passing its latest hurdle.

On the supply side, the Organization of the Petroleum Exporting Countries and their allies including Russia, a group known as OPEC+, is due to meet later this week. These top producers will likely discuss the option of allowing significantly more oil into the market given the recent price rises.

U.S. crude futures traded 2% higher at $62.70 a barrel, while the international benchmark Brent contract rose 2% to $65.69. 

Elsewhere, gold futures rose 1.4% to $1,752.10/oz, while EUR/USD traded 0.1% higher at 1.2088.