Germany Ifo Business Climate Index; ECOFIN informal meeting of EU finance ministers; OECD Quarterly Employment Situation; Bank of England MPC Member Gertjan Vlieghe speaks; updates from Michelin, LVMH, Galp Energia, Ryanair, Koninklijke Philips.
European stocks are set to open lower to start the week, at the start of a on important week for U.S. earnings and the Federal Reserve's policy meeting due to start Tuesday.
Stocks rallied Friday, pushing the Dow Jones Industrial Average across the 35000 closing milestone for the first time, in a striking rebound from major indexes' pullback earlier last week.
All three major U.S. stock indexes finished Friday at all-time highs after each posted weekly gains of more than 1%.
On a weekly basis, stay-at-home stocks and healthcare companies were among those to power the market higher, in a trading pattern that echoed the markets during the spring and summer of last year. Etsy gained 13% for the week, while Covid-19 vaccine-maker Moderna rallied 22%. Facebook and Twitter both gained roughly 8% or more for the week.
Behind the rally, money managers say, was another round of stellar earnings at American companies. Of the roughly 110 companies in the S&P 500 that had posted results through Thursday for the second quarter, 85% topped analysts' profit forecasts, according to FactSet.
Money managers also say that governments in the U.S. and Europe are unlikely to implement lockdowns that restrict growth, even if rising cases take the shine off the economic recovery.
"You have an earnings season that is going tremendously well," said Seema Shah, chief strategist at Principal Global Investors. The economic outlook isn't as strong as it was three months ago, but "the path ahead is not that negative and certainly there is a lot of buying the dip," she added.
Some money managers said that they expect choppiness in the markets in the months ahead, especially if more data continues to show that U.S. economic growth peaked this spring. Still, most expect that the U.S. economy will keep recovering.
This week will be the most important of this quarter's earnings season - even if later weeks beat it on quantity, it will be nearly impossible to top this slate in terms of dollars and attention.
That is because all of Big Tech will report, and those five companies - Google parent Alphabet, e-commerce and cloud-computing powerhouse Amazon.com, iPhone maker Apple, social-media titan Facebook and software giant Microsoft - can determine the course of the market at this point in history.
Stock movement is unlikely to be determined by the numbers those companies report, especially after the big bounce on Friday; forecasts have been more important for investors as they wait to see how long the current boom in corporate earnings will last. And all five companies have been careful with their forward-looking statements during the COVID-19 pandemic.
USD/JPY's near-term outlook may hinge on Fed Chairman Jerome Powell's views on the economic outlook, IG said.
The two-day U.S. central bank policy meeting is set to start Tuesday. Any cautious views on the economy by Powell is likely to cause dollar-selling, IG said.
Still, any selling of the greenback could be short-lived since the Fed is moving toward policy normalization, it added. USD/JPY's downside may also be limited so long as U.S. stock markets maintain much of their recent gains, IG said.
The U.S. dollar inches higher as Fed tapering looks more imminent. David Jones, chief market strategist at European trading platform Capital.com, told WSJ markets may be unprepared for the removal of monetary stimulus.
"I do not believe that this prospect is priced in, particularly when it comes to the US dollar." Jones said a USD comeback could happen later this year as the ECB promises to keep rates lower for longer. The greenback closed slightly weaker versus the euro on Friday.
Treasury yields rise Friday but the 10-year lost 0.014 percentage point last week to 1.286%. The benchmark has fallen 0.157 p.p. this month. Ally Invest's Lindsey Bell points out this would usually be an ominous sign for the overall market, but the fact that the Fed has been a very active buyer of Treasurys to prop up the economy requires a more careful look.
"When you zoom out, it's hard to be pessimistic," she said, adding that fears of premature tapering could be misplaced as "the Fed has been adamant that it's watching for more improvement in the job market before making moves."
WSJ reports the Fed is set to accelerate deliberations next week over how to scale back their easy-money policies as the recovery runs faster than they had anticipated. The 10-year yield, meanwhile, remains about half a percentage point below its March high.
Oil prices fell in early Asian trade as concerns over the Delta variant's spread in some Asian markets continue to weigh.
The rapid spread of the variant could lead to more local lockdowns and slow the speed of the economic recovery, Commerzbank said.
The recent OPEC+ agreement to increase oil supply is also bearish for crude in the short term, but it shouldn't weigh significantly amid tight fundamentals, Commerzbank said. "Despite the expansion in oil supply, the oil market will remain slightly undersupplied until the end of the year."
Gold rose in early Asian trade as signs of dovishness from the Federal Reserve and the European Central Bank support safe-haven assets, ANZ said.
The precious metal is holding above $1,800/oz, a level at which it previously encountered resistance. Yet, with bond yields rising, demand for the non-interest bearing metal could reduce, ANZ said.
It said that investors are now turning their attention to the upcoming FOMC meeting for indications of when policymakers could scale back asset purchases.
Copper rises in Asian morning trade amid signs of healthy demand from China. Chinese demand for the base metal rose 4.5% on year for the first four months of 2021, Commerzbank said, citing data from the International Copper Study Group.
The German bank noted that the global copper market was oversupplied from January to April, but the surplus was smaller than last year's.
Prices last year found support when the initial surplus eventually turned into a 500,000 ton deficit. It might not happen this year, which could weigh on prices. The three-month LME copper contract roses 1.3% to $9,639.00 a ton.
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