American stock futures point to an expanded rally

Investors begin the new year on an optimistic note, amid expectations that widespread deployment of coronavirus vaccines will allow economic activity to return to pre-pandemic levels. Shares have strengthened in recent weeks in such bets, even as the pandemic continues to spread, and hospitalization rates in the United States have risen to record highs on Sunday.

“There is still very bad news about the virus, but the market is looking at it because of the vaccines,” said Fahad Kamal, investment director at Kleinwort Hambros. “Without a doubt, we are positively inclined, given the expected economic recovery, historically low interest rates, a lot of fiscal spending and the monetary policy that will come: all this positivity remains.”

In pre-market trade, Tesla rose 2.8% after the electric car maker said it delivered a record 499,550 cars last year, close to its half-million target.

Flir Systems rose nearly 22% after Teledyne Technologies agreed to acquire the detection technology maker in a deal valued at about $ 8 billion.

New data on the health of the manufacturing sector was added on Monday. Factories in Asia and Europe increased their production as it closed in 2020, according to surveys conducted by purchasing managers that showed strong increases in activity during December. The results of a similar survey of US manufacturers, which will be published at 9:45 am ET, are also expected to point to a sharp increase in activity.

“We’re going through renewed blockades, which reduce activity to some extent, but what we’ve seen through the pandemic is that manufacturing activity tends to hold up pretty well,” said Sebastian Mackay, multi-set fund manager of Invesco. “The manufacturing PMIs we get today are likely to be quite robust and will give some indication that the economy is recovering.”

In bond markets, the yield on the 10-year benchmark Treasury note rose to 0.926%, from 0.913% on December 31st.

The dollar weakened, with the WSJ Dollar falling 0.5%.

Paul Sandhu, head of multi-set quantum solutions for BNP Paribas Asset Management’s Asia-Pacific region, said he expected the dollar to continue weakening, partly pressured by a likely rise in US spending on infrastructure and others. possible stimulus measures.

Abroad, the Stoxx Europe 600 pancontinental rose 1.6%.

The UK FTSE 100 was the leading index with the best performance in Europe, with a jump of 2.8%. The trade deal reached on Christmas Eve between the UK and the European Union is likely to be boosting British action, Mackay said.

“Many of the tail risks of a disagreement [Brexit] have been removed now. That will get people to start dipping their feet into the British market, ”he said.

Among European stocks, British gaming company Entain soared more than 28% after confirming a takeover bid for MGM Resorts International.

The offer values ​​the company at £ 8.09 billion, equivalent to $ 11.06 million.

Most of the major stock references in the Asia-Pacific region advanced at the end of the trading day. Kospi Composite of South Korea led the gains, up nearly 2.5%.

China’s Shanghai Composite gained 0.9% at the close of trading, even after a private survey showed that China’s manufacturing activity moderated in December due to weak demand for the country’s exports.

Ben Luk, a senior strategist for several sets at State Street Global Markets, said the data pointed to the continued fragility of the Chinese economy. But he said this helped alleviate concerns that China’s central bank would act prematurely to tighten monetary policy.

The Chinese yuan strengthened, to trade below $ 6.5, in the tightly controlled land market with no signs of state-backed institutions intervening to stop the rally, said Ken Cheung, strategist. Hong Kong’s leading Asian currency exchange bank Mizuho. Cheung said he indicated that the Chinese authorities were comfortable with greater appreciation and that, in turn, they helped the government increase the currency’s gains on both land and land.

“Many investors are also convinced that China’s growth history will remain intact as other major world economies fight the pandemic,” said Cheung, who added that China’s fastest growing and largest assets yield could push the currency to $ 6.3 yuan in the first half of this year. The yuan has not traded below $ 6.5 a dollar since the 2018 trade war began.

Japan’s Nikkei 225 fell 0.7% at the end of trading and the yen strengthened against the dollar, after Prime Minister Yoshihide Suga said it could declare a state of emergency in Tokyo and surrounding areas in as new coronavirus infections continue to increase.

Sandhu said Asian markets rose sharply where they left off in 2020, as investors continue to favor riskier assets, such as stocks in emerging markets such as China, South Korea and Taiwan. He said he expected Asia to be one of the most robust parts of world markets, in part because of its relative success in containing the coronavirus.

Bitcoin, the most popular cryptocurrency, cut some of the gains it had made during the New Year holidays. It went from less than $ 29,000 on New Year’s Eve to a high above $ 34,500 on Jan. 3, according to CoinDesk data. On Monday it stood at about $ 31,555.

“Investors around the world are looking for new asset classes to invest in and bitcoin seems quite attractive because it is an uncorrelated asset class,” Sandhu said.

Write to Joanne Chiu to [email protected] and Anna Hirtenstein to [email protected]