By Anna Hirtenstein
Technology shares led U.S. stock futures higher ahead of a blockbuster week in earnings, with investors awaiting results from companies such as Apple, Tesla and Facebook.
Futures tied to the S&P 500 ticked up 0.2%, pointing to an extension of gains that saw the index close nearly 2% higher and notch a record Friday. Futures linked to the Nasdaq-100 advanced 1%, suggesting a rally in tech stocks after the opening bell.
China's most valuable internet company, Tencent Holdings, jumped nearly 11% to a record high in Hong Kong trading. Tencent portfolio company Kuaishou Technology, a TikTok-like video-recording app, announced a coming initial public offering that may value it at about $60 billion. Amsterdam-listed shares of tech investment group Prosus, one of Tencent's biggest shareholders, rose 5.5%.
More than one-fifth of the broad S&P 500 index and a third of Dow Jones Industrial Average components are scheduled to release earnings this week. Starbucks, Verizon and Microsoft are slated for Tuesday. Other major tech firms are reporting later in the week, including Apple, Tesla and Facebook on Wednesday.
"The way that management will communicate their outlook will be key for markets," said Sophie Chardon, a cross-asset strategist at Lombard Odier. "Investors will have to weigh the possibility of vaccinations with the reality of new lockdowns" and the impact on each company.
Ahead of the opening bell, Apple shares climbed 2.3%. Data analytics firm Palantir Technologies jumped 8% and online marketplace Etsy added 1.5%. Kleenex and Huggies maker Kimberly Clark rose 2.1% after it said it expects net sales to rise in 2021, raised its quarterly dividend and announced a $5 billion share buyback program.
The pandemic and months of stay-at-home orders have split the economy into companies that benefit and those that suffer. The biggest tech companies are largely seen as benefactors, as firms and households increase their use of digital technology as they operate remotely.
The spread of new coronavirus variants has prompted retightened lockdown measures around the world and more uncertainty around the timeline of a return to normal, which may translate to another boost in demand for tech.
In premarket trading, real-estate firm Tishman Speyer's special-purpose acquisition company TS Innovation Acquisitions soared nearly 100% after it said it would merge with Latch, a smart lock maker, to take the company public.
Also ahead of the opening bell, GameStop's stock surged over 50%, with more than a million shares changing hands. The videogame retailer has been at the center of a fight between bullish day traders communicating on the internet forum Reddit, and short sellers, who bet heavily against the stock. Hedge fund Melvin Capital is among those that lost money from this.
Overseas, the pan-continental Stoxx Europe 600 fell 0.4%. European Central Bank's policy makers including President Christine Lagarde and Philip Lane, chief economist, will hold speeches Monday. Ms. Lagarde is expected to speak at the World Economic Forum's annual Davos conference, which will take place this week, albeit virtually.
In European equities, travel stocks were among the worst performers. Politicians in the U.K. and France are contemplating tighter restrictions amid the spread of coronavirus mutations, according to analysts at RBC Capital Markets. British Airways owner International Consolidated Airlines tumbled 8.4%, Ryanair slipped 5.7% and aircraft engine-maker Rolls Royce declined nearly 6%.
French utility EDF slumped over 17% following reports that France's government and the European Union won't reach an agreement to restructure the company in the near future.
In Asia, most major stock benchmarks rose. The Shanghai Composite Index added 0.5% and Hong Kong's Hang Seng Index climbed 2.4%, buoyed by a rally in tech shares. South Korea's Kospi Index advanced 2.2%. The index's heavyweight Samsung Electronics rose 3% and chip maker SK Hynix ticked up over 5%. Both are slated to report earnings this week.
In bond markets, the yield on the benchmark 10-year U.S. Treasury bond edged down to 1.075% from 1.090% on Friday.
Negotiations over President Joe Biden's plan for additional fiscal stimulus will be an area of focus for investors. His proposal for a $1.9 trillion spending package was discussed by lawmakers in a call Sunday and is likely to be worked on this week.
Sebastian Mackay, a multiasset fund manager at Invesco, thought a package could be passed in the next couple of weeks. For markets, "it's about the extent to which the Fed is still in play, while the fiscal stimulus is coming through," he said.
Write to Anna Hirtenstein at firstname.lastname@example.org
(END) Dow Jones Newswires