US Stock Futures Gain as Rates Relief Sets In: Markets Wrap

(Bloomberg) — US stock futures advanced as traders took comfort from the Federal Reserve's signal that there's no plan to raise interest rates and looked ahead to Apple Inc.'s upcoming earnings.

S&P 500 contracts climbed 0.7%, with Apple, Amazon.com Inc. and Nvidia Corp. posting small gains in pre-market trading. The yen was the center of attention in foreign exchange, recording another day of big swings amid speculation that Japanese authorities had stepped in to support the currency. 

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Markets are celebrating the fact that the Fed struck a more dovish note than some had expected, even after a slew of statistics pointed to sticky inflation pressures. Chair Jerome Powell said it's unlikely the central bank's next move would be to raise rates, saying authorities would need to see persuasive evidence that policy isn't tight enough to bring inflation back toward the 2% target.

"All in all, it's a bull message for markets," said Benjamin Melman, chief investment officer at Edmond de Rothschild Asset Management. "We've got the confirmation that Powell doesn't want to raise rates."  

Further insight into the health of the US economy will come from initial jobless claims and factory orders on Thursday, though the main focus will be April non-farm payrolls data due at the end of the week. A Bloomberg Economics model points to an unchanged unemployment rate of 3.8%. That suggests "hiring likely remains too hot for the Fed," economists Andrej Sokol and Scott Johnson wrote in a note. 

Apple's figures, which are due after the US market closes, will give investors a better sense of how the iPhone maker is weathering a sales slump, due in part to a sluggish China market. 

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"Earnings are looking quite resilient, quite constructive on the equities side," John Woods, CIO for Asia Pacific at Lombard Odier, said in an interview on Bloomberg Television. "It's overwhelmingly a US story for now."

Unforgiving Investors Want Bumper Earnings After Record Rally

In Europe, stocks had small moves amid mixed company reports. Drugmaker Novo Nordisk A/S dropped after disappointing results and transport giant Moller-Maersk A/S retreated. Shell Plc advanced after the energy producer posted a profit beat and announced a $3.5 billion share buyback. 

Yen Slide

The Japanese yen slid as much as 1.1% against the dollar, after a late surge Wednesday in New York. The renewed decline suggests investors are skeptical that Japanese authorities will be able to prevent the currency from weakening, given the country's wide interest-rate differential with the US.

The Hang Seng Index jumped more than 2%, putting it on track to enter a technical bull market. Hong Kong's currency peg to the greenback is burnishing its haven appeal amid the threat of higher-for-longer US interest rates.

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In commodities, oil clawed back losses from Wednesday.

Key events this week:

• US factory orders, initial jobless claims, trade, Thursday
• Apple earnings, Thursday
• Eurozone unemployment, Friday
• US unemployment, nonfarm payrolls, ISM Services, Friday
• Chicago Fed President Austan Goolsbee speaks, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures rose 0.6% as of 7:47 a.m. New York time
• Nasdaq 100 futures rose 0.8%
• Futures on the Dow Jones Industrial Average rose 0.4%
• The Stoxx Europe 600 was little changed
• The MSCI World index rose 0.2%

Currencies

• The Bloomberg Dollar Spot Index fell 0.4%
• The euro fell 0.1% to $1.0700
• The British pound fell 0.1% to $1.2512
• The Japanese yen fell 0.2% to 154.83 per dollar

Cryptocurrencies

• Bitcoin rose 2.4% to $58,657.01
• Ether rose 1.9% to $2,992.08

Bonds

• The yield on 10-year Treasuries declined three basis points to 4.60%
• Germany's 10-year yield declined five basis points to 2.53%
• Britain's 10-year yield declined eight basis points to 4.29%

Commodities

• West Texas Intermediate crude rose 0.8% to $79.64 a barrel
• Spot gold fell 0.9% to $2,298.42 an ounce

This story was produced with the assistance of Bloomberg Automation.

—With assistance from Winnie Hsu, Richard Henderson and Catherine Bosley.

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