While Wall Street futures firmed on optimism that the results of AI diva Nvidia this week would justify the tech sector’s sky-high valuations, European equities, and the euro rose Monday as Germany’s election yielded no unpleasant shocks.
While the single currency increased 0.5% to $1.0516 and appeared poised to hit its January peak of $0.10535, DAX futures surged 1.1%. FTSE futures gained 0.1% and EURO STOXX 50 futures by 0.4%. It is still unclear if Friedrich Merz, Germany’s new conservative leader, would build a coalition government with one or two partners; the latter will likely need more time and horse-trading.
The ambiguity arises as leaders of the European Union prepare to meet in an emergency summit on March 6 to discuss ways to finance European defense requirements and further assistance for Ukraine. A holiday in Tokyo markets reduced liquidity, and MSCI’s broadest index of Asia-Pacific stocks outside of Japan fell 0.2%. Nikkei futures closed below the cash level of 38,776 at 38,310.
Hong Kong shares extended their tech-driven bull run by gaining 0.2%, while Chinese blue chips saw a 0.1% decline. Nasdaq futures gained 0.5% and S&P 500 futures by 0.4%. The Magnificent Seven led the 2.5% decline on the Nasdaq last week, which was its worst performance in three months.
Investors expect first-quarter projections of around $42.5 billion and fourth-quarter sales of about $38.5 billion, so the decline will increase the stakes for Nvidia’s earnings on Wednesday. If the findings are unexpected, options predict a share price movement of about 8% in either direction.
Wall Street suffered when a poll on services revealed a sharp decline in activity on Friday due to worries about tariffs and cost constraints. According to some sources, the White House was urging Mexico to impose its duties on Chinese goods. as part of an agreement.
Concerns over tariffs may overshadow the Federal Reserve’s preferred core inflation indicator, which is scheduled to be released on Friday and predicted to drop to 2.6% from 2.8%. According to a U.S. consumer poll released on Friday, inflation predictions for the next five to ten years increased to 3.5%, the highest level since 1995.
In a note, ANZ analysts cautioned, “There is a chance that longer-term inflation expectations will loosen.” “That was the unmistakable takeaway from the subset of soft U.S. economic surveys made public on Friday, and the data indicate that the Fed needs to exercise more caution.”
This week, at least nine Fed officials will talk, some more than once, and they will restate the cautious message about more rate reduction. Only two cuts are anticipated during the year, and markets are not priced for an easing until July.
Following the lackluster services report, treasuries rose, but supply and inflation concerns still pose a threat, and 10-year futures fell five ticks on Monday. As Japanese rates climb amid rumors of another rate hike by the Bank of Japan, the decline in Treasury yields, especially in real terms, has put pressure on the dollar relative to the yen.
After losing 2% last week to jeopardize chart support at 148.65, the dollar was trapped around 149.36 yen. Due to declines in the euro, pound, and Swiss franc, the dollar index fell 0.3% to 106.210. After rising for eight weeks, gold was still strongly supported at $2,935 an ounce in commodities markets.
Due to expectations that sanctions against Russia may be loosened as part of a future peace agreement with Ukraine, oil has been moving in the other way. U.S. crude climbed 1 cent to $70.42 per barrel after hitting a two-month low earlier, while Brent was up 11 cents at $74.54 per barrel.
