Futures Pointing To Continued Strength On Wall Street

The major U.S. index futures are currently pointing to a higher opening on Monday, with stocks likely to extend the strong upward move seen last week.

The markets are likely to continue to benefit from recent upward momentum, which has propelled the Nasdaq and S&P 500 to new record highs.

A slowdown in the spread of the coronavirus in different parts of the world and vaccine rollout efforts are likely to generate continued buying interest.

Traders also remain optimistic about the outlook for the global economy and the likelihood of additional U.S. fiscal stimulus.

Democrats have taken the first steps toward passing President Joe Biden’s $1.9 trillion relief package without Republican support but continue to favor a bipartisan approach.

Nonetheless, trading activity may be somewhat subdued amid a quiet day on the U.S. economic front, with some traders likely to remain away from their desks following the Super Bowl on Sunday.

Stocks moved mostly higher during trading on Friday, extending the upward trend seen over the past several sessions. With the continued advance, the Nasdaq and the S&P 500 once again reached new record closing highs.

The major averages all finished the day moderately higher. The Dow rose 92.38 points or 0.3 percent to 31,148.24, the Nasdaq advanced 78.55 points or 0.6 percent to 13,856.30 and the S&P 500 climbed 15.09 points or 0.4 percent to 3,886.83.

Following the steep drop seen in the previous week, the major averages all moved sharply higher for this week. The Dow surged up by 3.9 percent, the S&P 500 spiked by 4.6 percent and the Nasdaq soared by 6 percent.

The continued strength on Wall Street came after the Labor Department report released a closely watched report showing a modest rebound in employment in the month of January.

The report said non-farm payroll employment edged up by 49,000 jobs in January after plunging by a revised 227,000 jobs in December.

Economists had expected employment to rise by about 50,000 jobs following the loss of 140,000 jobs originally reported for the previous month.

Traders may see the uptick in employment as a goldilocks situation, as the modest increase offsets concerns of a prolonged slump but also suggests the economy could benefit from more fiscal stimulus.

The Labor Department also said the unemployment rate slid to 6.3 percent in January from 6.7 percent in December. The unemployment rate was expected to come in unchanged.

The unexpected drop in the unemployment rate came as household employment rose by a solid 381,000 persons compared with a 206,000-person decrease in the size of labor force.

Despite the decrease, Andrew Hunter, Senior US Economist at Capital Economics, said the relatively high unemployment rate “suggests there is still some way to go in the labor market recovery.”

“But, as the vaccine rollout allows the economy to reopen and demand is given an additional lift from continued fiscal support, we expect the unemployment rate to reach 4.5% by the end of this year,” Hunter said.

The markets continued to benefit from upbeat news on the earnings front, with Ford (F), Estée Lauder (EL), Activision Blizzard (ATVI) and Gilead Sciences (GILD) all moving higher after reporting their quarterly results.

Buying interest was also generated in reaction to news that Johnson & Johnson (JNJ) has applied for an emergency use authorization from the FDA for its single-dose coronavirus vaccine.

Gold stocks moved sharply higher over the course of the trading session, driving the NYSE Arca Gold Bugs Index up by 2.7 percent. The rally by gold stocks came amid a significant rebound by the price of the precious metal.

Considerable strength was also visible among steel stocks, as reflected by the 2.1 percent jump by the NYSE Arca Steel Index.

Housing stocks also turned in a strong performance on the day, resulting in a 2 percent advance by the Philadelphia Housing Sector Index.

Networking, biotechnology and chemical stocks also saw notable strength, while some weakness was visible among semiconductor and airline stocks.

Commodity, Currency Markets

Crude oil futures are climbing $0.71 to $57.56 a barrel after rising $0.62 to $56.85 a barrel last Friday. Meanwhile, after jumping $21.80 to $1,813 an ounce in the previous session, gold futures are advancing $14.10 to $1,827.10 an ounce.

On the currency front, the U.S. dollar is trading at 105.52 yen versus the 105.39 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is trading at $1.2035 compared to last Friday’s $1.2046.

Asia

Asian stocks ended broadly higher on Monday amid optimism that falling coronavirus infection rates in different parts of the world and the continued rollout of vaccines will provide a major boost to the economic recovery.

Stimulus news remained in focus as well after U.S. lawmakers approved a budget outline that will allow them to muscle President Biden’s $1.9 trillion Covid-19 relief package through in the coming weeks without Republican support.

House Speaker Nancy Pelosi said she believes the final Covid-19 relief legislation could pass Congress before March 15, when special unemployment benefits that were added during the pandemic expire.

Chinese shares rallied on hopes of a quicker economic revival. Tech shares rose broadly despite the release of new anti-monopoly guidelines over the weekend.

The benchmark Shanghai Composite Index jumped 36.11 points, or 1 percent, to 3,532.45, while Hong Kong’s Hang Seng Index edged up 0.1 percent to settle at 29,319.47.

Japanese shares hit a fresh 30-year high, with sentiment underpinned by dropping Covid-19 cases, better than expected earnings and growing optimism over the global economy.

There were reports that Japan will consider lifting its coronavirus state of emergency in some prefectures ahead of the new deadline, if the situation improves.

Credit ratings agency Fitch said today it is keeping Japan’s sovereign rating at ‘A’ with a ‘negative’ outlook.

“We expect the large fiscal support to be unwound gradually, but downside risks to growth exacerbate the challenge of placing the debt ratio on a downward path over the medium term,” the ratings agency said.

The Nikkei 225 Index spiked 609.31 points, or 2.1 percent, to 29,388.50, marking the highest level since August 1990. The broader Topix closed 1.8 percent higher at 1,923.95, the highest since June 1991.

Kobe Steel soared 17.5 percent after raising its full-year outlook. Similarly, Nippon Steel jumped 10 percent after revising its FY20 business outlook upwards. Rival JFE Holdings advanced 7.4 percent.

The New Zealand market was closed for a public holiday. Australian markets advanced after the country reported no new local coronavirus cases for a third day on Sunday.

The benchmark S&P/ASX 200 Index rose 40.20 points, or 0.6 percent, to 6,880.70 amid gains across the board. The broader All Ordinaries Index ended up 47.90 points, or 0.7 percent, at 7,160.80.

Higher iron ore prices helped lift miners, with BHP, Fortescue Metals Group and Rio Tinto climbing 2-3 percent. Tech stocks gained ground, with Afterpay and Xero rising over 1 percent each.

Vocus Group surged 12.8 percent after the network solutions provider confirmed it has received a multi-billion-dollar takeover offer.

Meanwhile, Seoul stocks fell sharply, dragged down by automakers. The benchmark Kospi dropped 29.39 points, or 0.9 percent, to 3,091.24.

Hyundai Motor slumped 6.2 percent and its affiliate Kia Motors plunged 15 percent after both companies said they are not having talks with Apple over an electric vehicle project. Auto-parts maker Hyundai Mobis plummeted 8.7 percent.

On the Covid-19 front, authorities began allowing restaurants, coffee shops, indoor gyms and other facilities outside the densely populous Seoul metropolitan region to stay open an hour longer after new daily infections fell below 300 for the first time since November 23.

Europe

European stocks have moved higher on Monday amid optimism that a slowdown in the spread of the coronavirus in different parts of the world and vaccine rollout efforts will result in a swifter global economic recovery.

While the German DAX Index has risen by 0.5 percent, the French CAC 40 Index is up by 1 percent and the U.K.’s FTSE 100 Index is up by 1.1 percent.

Swiss specialty chemicals company Sika AG has moved to the upside. The company has agreed to acquire Kreps LLC, a mortar manufacturer in Russia.

Dutch paints and coatings maker Akzo Nobel N.V. has also moved higher after saying it does not plan to pursue an acquisition of Tikkurila.

BP Plc and Royal Dutch Shell have also risen after oil prices surpassed $60 a barrel on the back of tightened global oil supplies and renewed hopes over the passing of a U.S. stimulus package.

Metro AG shares have also rallied. The German wholesale retailer is set to appoint Steffen Greubel as new chief executive of the company with effect from May 2021.

1&1 Drillisch AG has also surged. The telecommunications company said that its subsidiary, Drillisch Online GmbH, has received the arbitral award in the arbitration proceedings regarding Price Review 1 under the existing MBA MVNO agreement with Telefónica.

Dialog Semiconductor shares have also soared as much. The chip designer confirmed that it is in advanced discussions with Renesas Electronics Corp. regarding a possible all cash offer of 67.50 euros per Dialog share.

On the other hand, Rolls-Royce Holdings has declined amid reports that it plans to shut down its jet engine factories this summer due to insufficient work.

In economic news, Germany’s industrial production remained flat in December, data from Destatis revealed.

Industrial production was unchanged compared to previous month, following a revised 1.5 percent rise in November. Economists had forecast a 0.3 percent rise for December.

On a yearly basis, the decline in industrial output eased to 1 percent from 2.5 percent a month ago.

U.S. Economic Reports

Cleveland Federal Reserve President Loretta Mester is scheduled to participate in a fireside chat on the economy before a virtual Rotary Club of Toledo meeting at 12 pm ET.

Stocks In Focus

Shares of Cubic Corp. (CUB) are moving sharply higher in pre-market trading after the provider of transportation-related technology agreed to be acquired by Veritas Capital and Evergreen Coast Capital for $70 per share in cash.

Battery maker Energizer Holdings (ENR) is also likely to see initial strength after reporting better than expected fiscal first quarter results and raising its full-year guidance.

Shares of Hasbro (HAS) may also move to the upside after the toy maker reported fourth quarter results that exceeded analyst estimates on both the top and bottom lines.

Data analysis software maker Palantir Technologies (PLTR) is also seeing significant pre-market strength after announcing a new partnership with IBM (IBM).