Brendan McDermid/Reuters
- US futures edged higher on Tuesday after the benchmark indices climbed the previous day.
- A strong earnings season so far has offset fears about inflation, central banks, and Evergrande.
- The crypto world was excited as the first bitcoin futures exchange-traded fund was due to launch.
US futures edged upwards on Monday as investors weighed strong company earnings against worries about rising inflation and distressed Chinese property developer Evergrande.
S&P 500 futures were up 0.26% after the index rose 0.34% the previous day. Nasdaq 100 futures were 0.25% higher while Dow Jones futures rose 0.19%.
European stocks also made small gains, with the Stoxx 600 up only slightly. China's CSI 300 rose 0.98% overnight, while Tokyo's Nikkei 225 climbed 0.65%.
Stocks have been volatile for the past two months as investors have fretted about strong price rises, the likelihood of less central bank stimulus, and fears of contagion from the looming default of China's Evergrande.
But equities have been supported by a strong third-quarter earnings season so far, with US banks in particular posting solid results.
Data company FactSet said companies' profit margins remained strong in the third quarter and were on track to come in at their third-highest level since 2008.
"More S&P 500 companies are beating [earnings per share] estimates for the third quarter than average, and beating EPS estimates by a wider margin than average," said John Butters, senior earnings analyst at FactSet.
Earnings season continues on Tuesday, with Netflix and Johnson & Johnson set to report their latest figures.
However, investors remain jittery about inflation and its likely effect on central bank policy. Bank of England governor Andrew Bailey gave a strong signal over the weekend that the BoE is likely to raise interest rates soon to deal with strong price rises, making it the first major central bank to do so.
Another major worry is the crisis at China's Evergrande, a stressed property developer that owes more than $300 billion. It met a Hong Kong coupon payment on Tuesday, but has missed a number of other recent installments on offshore bonds.
Barclays and UBS downgraded their 2021 growth forecasts for China on Monday, saying the Evergrande crisis was spreading to the broader property market and weighing on investment.
Despite concerns about inflation, the yield on the key 10-year US Treasury note has stayed steady in recent days. It was roughly flat on Tuesday at 1.584%, down from above 1.62% on Monday.
Yet the prospect of higher interest rates has lifted shorter maturity bond yields sharply. The yield on the 3-year Treasury note stood at 0.701% on Tuesday, down slightly from Monday but trading at around its highest since the start of the pandemic.
Elsewhere in markets, oil prices rose again as the global energy crunch pushed users back towards the fossil fuel. Brent crude was up 0.69% to $84.92, its highest level since January 2018. WTI crude was up 0.99% to $82.52 a barrel, its highest since January 2014.
Bitcoin was flat at around $62,100 after rising sharply in recent days in anticipation of the first bitcoin futures exchange-traded fund, which is due to launch on Tuesday.
"The cryptoverse is about to get a whole lot bigger now that the first US bitcoin-linked ETF will launch on Tuesday," said Edward Moya, senior market analyst at Oanda.
"Cryptocurrencies will now play a larger role on Wall Street and that has brought bitcoin within striking distance of record high territory," he added. Bitcoin touched a record high of close to $65,000 in April.
from Business Insider https://ift.tt/3AXty6V
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