(Bloomberg) — Markets started the week in the green, with tech shares climbing and investors continuing to focus on the U.S. administration’s $1.9 trillion Covid-19 relief plan.
Futures on the Nasdaq 100 Index added almost 1%, outperforming contracts on the Russell 2000 Index of small-cap shares. In Asia, Chinese internet firm Tencent Holdings Ltd. soared 11%, the biggest gain since 2011, as mainland traders sparked a buying frenzy for shares and options.
The picture was more mixed in Europe, with equity benchmarks in France, Spain and the U.K. turning modestly lower. Crude oil in New York climbed toward $53 a barrel and Bitcoin rebounded above $33,000. The dollar and euro were steady.
After ending last week on a rocky note, global stocks are resuming their march upward, seemingly confident that Democratic lawmakers will be able to push forward their sweeping stimulus package in the face of Republican pressure. Just as important for the market this week will be the parade of earnings, with the biggest U.S. tech giants including Apple Inc., Tesla Inc. and Facebook Inc. scheduled to release results.
“The Federal Reserve, continued string of earnings with big techs ahead and the fear of missing out are driving the equity market,” said Sebastien Galy, a senior strategist at Nordea Investment Funds. “We expect the Fed to push back against the notion of tapering and that should be supportive of risky assets.”
The combination of record stock prices, extreme gains in everything from Bitcoin to GameStop Corp. shares and Tencent, along with investor exuberance is reviving the debate over whether lavish central bank stimulus has created asset bubbles.
While corners of the U.S. equity universe are showing signs of froth, that shouldn’t put the broader market at risk, said Goldman Sachs Group Inc.
“Pockets of the market have recently appeared to demonstrate investor behavior consistent with bubble-like sentiment,” wrote strategists including David Kostin wrote in a note Friday. “But these excesses present low systemic risk to the broader market given their modest share of market cap.”
These are some key events coming up in the week ahead:
Microsoft Corp., Apple Inc., Tesla Inc., Facebook Inc., UBS Group AG and Samsung Electronics Co. are among companies reporting results.Chinese President Xi Jinping is due to speak at the World Economic Forum’s “The Davos Agenda 2021” online event on Monday.People’s Bank of China Governor Yi Gang and European Central Bank Chief Economist Philip Lane speak at a conference on Monday.Data on U.S. home prices and consumer confidence come Tuesday.The Federal Open Market Committee monetary policy decision and briefing by Chair Jerome Powell are scheduled for Wednesday.Fourth-quarter GDP, initial jobless claims and new home sales are among U.S. data releases Thursday.U.S. personal income, spending and pending home sales come Friday.
These are the main moves in markets:
Stocks
Futures on the S&P 500 Index gained 0.4% as of 9:55 a.m. London time.The Stoxx Europe 600 Index increased 0.1%.The MSCI Asia Pacific Index advanced 0.9%.The MSCI Emerging Market Index climbed 1.1%.
Currencies
The Bloomberg Dollar Spot Index gained 0.1% to 1,123.57.The euro decreased 0.2% to $1.215.The British pound fell 0.1% to $1.367.The Japanese yen was little changed at 103.80 per dollar.
Bonds
The yield on 10-year Treasuries declined less than one basis point to 1.08%.The yield on two-year Treasuries gained less than one basis point to 0.12%.Germany’s 10-year yield fell two basis points to -0.53%.Britain’s 10-year yield decreased two basis points to 0.286%.
Commodities
West Texas Intermediate crude gained 1.3% to $52.66 a barrel.Gold was little changed at $1,855.70 an ounce.
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