U.S. stock futures rise as bonds rise

The shares, especially those of technology companies, were affected by volatile movements in the government bond markets in recent trading sessions. A rise in earnings last week called into question the prospect of a long period of low interest rates, which sustained the sharp rise in stocks last year.

Monday’s drop in yields helped revive investor demand for shares. But money managers remained cautious about new spikes that could trigger further volatility in stock prices. Later, investors will analyze a speech by Fed Governor Lael Brainard for clues as to whether the central bank will react against higher yields.

“This week is critical,” said Andrea Carzana, fund manager at Columbia Threadneedle Investments, based in London. If the Fed does not try to contain expectations of higher inflation, yields may continue to rise, shaking the stock market, according to Carzana.

“I hope that the turbulence or volatility will remain with us until we have a better understanding of the position of central banks,” he said.

Fed officials have hitherto suggested that the rise in yields reflects expectations of an economic recovery fueled by the vaccine program and the likelihood of further fiscal stimulus. President Biden asked the Senate over the weekend to take quick action after the House approved its $ 1.9 trillion Covid-19 aid package.

Democrats are racing to finish the package before March 14, when certain types of federal unemployment assistance will expire.

It is the pace at which yields have increased, rather than their definitive level, that has unsettled many investors. “I still think stocks are more attractive than bonds, especially if you believe there will be some inflation temporarily,” said Carzana, adding that stocks offer more protection against rising prices.

Ms. Brainard is scheduled to address a conference at the Institute of International Bankers on financial stability at 9:05 am Eastern Time. John Williams of the New York Fed, Loretta Mester of the Cleveland Fed and Neel Kashkari of the Minneapolis Fed are also expected to make public appearances.

The February manufacturing index reading from the Institute for Supply Management is expected to be released at 10am and is expected to show yet another month of robust growth in activity at US factories.

The corporate earnings season is ending, with Zoom Video Communications and Novavax scheduled to report quarterly results after markets close.

The oil markets resumed their recovery before a meeting of the Organization of Petroleum Exporting Countries and its partners on Thursday. Brent-type oil futures, a benchmark in the international energy markets, rose 1.7% to $ 65.52 a barrel, expanding the advance this year to 27%.

Analysts expect the cartel, which has been holding millions of barrels of oil a day since last spring to raise prices, will agree to increase production in April.

The improvement in investor sentiment boosted foreign markets. Stoxx Europe 600 jumped 1.7%, led by shares in retail and travel and leisure companies, whose fortunes depend on the reopening of economic activity.

In Asia, Japan’s Nikkei 225 rose 2.4% at the close and China’s Shanghai Composite Index rose 1.2%.

China’s manufacturing activity slowed in February, registering the slowest rate of expansion in nine months, according to a private survey of manufacturers. Even so, it was the 10th consecutive month in which the Caixin index remained above the 50 mark, which separates expansion from contraction.

Write to Joe Wallace at [email protected]