After a solid jobs report that sent the Dow Jones surging more than 200 points, investors on Friday will get a look at factory orders data for December. A forecast for a 0.5 percent decline in orders may seem to be counterintuitive to the positive jobs report. But the jobs data point is considered solid, as it’s a bounceback from the previous two months, which saw the loss of a combined 50,000 jobs.
Concerns about the health of the Chinese economy are weighing on investor sentiment in Asia, but a report due out later today may provide some relief: a Chinese manufacturing index due out later today is expected to show improvement in the sector, which has been one of the weakest parts of the world’s second-largest economy. The survey, due out at 10 am ET, comes after manufacturing data from Japan and Taiwan pointed to growth in the sector: the Japanese Purchasing Managers Index increased to 52.7 in July from 51.4 in June, while the Taiwan manufacturing index rose to 52.6 from 51.2.
U.S. stock futures rose Monday ahead of the release of industrial production data that could provide more insight into the pace of the global economic recovery.
S&P 500 futures rose 0.6%, indicating further gains for the broader market index, which closed its best month since November. Contracts linked to the Dow Jones Industrial Average rose 0.7%.
Investors are encouraged by signs that economic growth is picking up in most advanced economies, with rising corporate profits and a positive outlook providing grounds for optimism. At the same time, fund managers are assessing the continued spread of Covid-19 in many parts of the world and trying to assess the prospects of inflation that could erode the value of investment returns.
There is a delicate balance between all the positive factors, such as earnings momentum, deal renewal, vaccine usage, and some of the limiting factors, such as [high] valuations and the inflation outlook, he said.
Luke Philip,
Head of Private Banking at SYZ Private Banking. The market will weigh all these positives and negatives, but we think the positives will outweigh the negatives.
U.S. manufacturing data expected Monday will provide more insight into the pace of the economic recovery.
Photo:
Alisha Jucevic/Bloomberg News
In the pre-sale offers,
Estee Lauder
fell 3.5% after quarterly earnings fell short of analysts’ expectations. Moderna’s preliminary market growth rate was nearly 3%. On Monday, the drugmaker said it would provide 34 million doses of the Covid-19 vaccine under an international program to distribute vaccines to developing countries. Tesla drops nearly 1% after reports that construction of a Gigafactory for battery production in Europe will be delayed by six months.
At 9:45 a.m., two U.S. manufacturing indicators for April are expected. Today’s data will be another indicator of the strength of that momentum, Philip said. Economic momentum will improve, but the big question is this: What is already priced on the market?
Similar surveys of manufacturing purchasing managers in the eurozone, Germany, France, Spain, Switzerland and Italy, generally indicated an increase in activity in April, although in some countries it was not as strong as analysts had expected.
Chairman of the Federal Reserve System
Jerome Powell.
will speak at the virtual conference at 2:20 pm. Investors are likely to follow Powell’s new insights on the economy’s performance.
On the bond markets, the rate on 10-year Treasury bonds rose to 1.646%. Last week ended with 1.632% and brought the biggest weekly gain since mid-March.
Outside Germany, the pan-continental Stoxx Europe 600 index rose 0.3%. The British markets are closed on Monday.
Among European values,
Siemens Gamesa Renewable Energy
fell more than 3% after the company lowered its full-year profit forecast.
Hong Kong’s Hang Seng Index was down 1.3 percent at the close of trading. India’s Sensex index fell 0.6 percent after losing 1.5 percent last month. Markets in Japan and China were closed due to the holiday.
In recent years, purchasing managers’ indices have become important indicators of the potential direction of the global economy. But in the current recession, where small businesses are being hit hardest, PMI figures may not reflect the whole picture. The WSJ explains. Photo: Getty Images (video from 7/1/20)
Email Anna Hirtenstein at [email protected].
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