U.S. equity futures moved higher Monday, while Treasury bond yields eased and the dollar gave back some of last week’s gains, as investors pare bets on accelerated tightening from the Federal Reserve heading into the final throes of the third quarter earnings season.
Retail will likely capture the market’s focus this week with third quarter updates from Walmart (WMT) – Get Walmart Inc. Report, Home Depot (HD) – Get Home Depot, Inc. (HD) Report, Target (TGT) – Get Target Corporation Report and Macy’s (M) – Get Macy’s Inc Report this week, as well as what could be a key reading of October U.S. retail sales on Tuesday.
The data will cap a solid third quarter earnings season that is on pace to deliver a 41.5% increase in collective S&P 500 profits, taking them to just under $451 billion.
That’s allowed investors to shrug-off the implications of last week’s hotter-than-expected October inflation reading of 6.2%, the fastest since 1990, and the chances of a near-term acceleration in the Fed’s tapering schedule.
Overnight sentiment was also boosted by data from China showing stronger-than-expected gain for industrial output and retail sales last month, adding to its robust factory rebound, although disappointing GDP data from Japan capped regional market gains.
On Wall Street, futures contracts tied to the Dow Jones Industrial Average are indicating a 150 point opening gain while those linked to the S&P 500 are priced for a 14 point move to the upside.
Futures tied to the tech-focused Nasdaq Composite are indicating a 45 point advance as benchmark 10-year Treasury note yields edge lower, to 1.544%, in overnight trading.
Boeing (BA) – Get Boeing Company Report shares were active in pre-market trading, and providing a solid boost for the Dow, after the world’s biggest planemaker scored two freighter sales at the Dubai Airshow and amid reports that authorities in China may be close to clearing the grounded 737 MAX for a return to service.
Tesla (TSLA) – Get Tesla Inc Report shares, meanwhile, extended last week’s slide after co-founder and CEO Elon Musk suggested he may sell off even more of his Tesla shares in a Twitter spar with Democratic Senator Bernie Sanders.
Another stock to watch is Peabody Energy, one of the world’s biggest ‘pure play’ coal companies, following a weekend agreement to ‘phase down’ fossil fuel production following two weeks of negotiations at the COP26 climate summit.
Royal Dutch Shell’s (RDS.A) – Get Royal Dutch Shell Plc Sponsored ADR Class A Report U.S.-listed shares jumped 1.5% higher after Europe’s biggest oil company said it would move its corporate headquarters, as well as its main share listing, to London.
The Anglo-Dutch firm will also drop “Royal” from its name and abandon its dual corporate structure as it departs the Netherlands after more than 110 years amid a long-running dispute over taxes and climate targets. It’s also hoping to assuage a call from activist investor Third Point to break the oil giant up into smaller, more efficient companies.
Away from equities, U.S. oil prices slipped below $80 a barrel, potentially offering some relief for domestic gasoline prices, amid calls from lawmakers for President Joe Biden to release crude from the nation’s Strategic Petroleum Reserve.
WTI futures for December delivery were marked $1.14 lower from Friday’s close to change hands at $79.65 per barrel in early New York trading, while Brent contracts for January fell $1.26 to $80.91 per barrel.
In overseas markets, Europe’s Stoxx 600 edged 0.11% higher by mid-day trading in Frankfurt while solid gains in South Korea lifted the region-wide MSCI ex-Japan index to a 0.4% gain for the session.
In Tokyo, the Nikkei 225 closed 0.65% higher at 29,776.80 points.