Global stock markets and U.S. futures largely edged higher as traders in parts of Asia, the U.S. and Canada take a breath for public holidays. U.S. equity and bond markets shuttered for Presidents Day, though futures tied to equities rose in early European trade. Lunar New Year celebrations closed trading floors in mainland China and South Korea.
The dollar rose slightly but remained within its recent range in holiday-thinned trade.
Friday’s soft U.S. inflation print helped push gold back above $5,000 an ounce, while oil traded flat as geopolitical risks linger. Investors are looking ahead to the publication of Federal Reserve meeting minutes on Wednesday followed by advance U.S. fourth-quarter gross domestic product figures and PCE inflation data on Friday.
—Futures tied to major U.S. indexes were up early on Presidents Day morning. Both the Dow Jones Industrial Average and the S&P 500 were up 0.4% premarket, while futures for the tech-heavy Nasdaq were up 0.35%. The Nasdaq is currently on its longest closing streak since May 2022, with the index’s fall to Friday’s close marking five consecutive losing weeks.
—Asian equities were mixed, with Japan’s stocks giving up early-morning gains after fourth-quarter GDP data showed a modest rebound, fueling concerns over potential interest-rate hikes. The Nikkei 225 ended 0.2% lower, dragged down by banking shares, though SoftBank Group closed up 6.8%.
Elsewhere, Hong Kong’s Hang Seng Index rose 0.5% at midday, before closing early on the eve of Lunar New Year. Major regional markets, including mainland China and South Korea, remained closed for the holiday. Chinese equity markets will remain closed through Monday Feb. 23.
—Europe’s blue-chip indexes started the week up as defense stocks gained and financial stocks rebounded after slipping Friday. The FTSE 100 nudged up 0.2% in London, with NatWest Group up 3.8% while Barclays gained 2.4%. Banks pushed the Spanish IBEX 35 up 0.9%, with Santander climbing 2.5% and defense-tech company Indra Sistemas up 2.25%. Italy’s FTSE MIB rose 0.6% on bank gains. Unicredit—the index’s largest constituent—rose 2%. The French CAC 40 was up 0.3% as luxury stocks rallied alongside banks. Luxuries bellwether LVMH climbed 1.9%. Germany’s DAX rose 0.35%, led by a 2.2% rise for Deutsche Bank. Software company Scout24—up 1.8%—was among a clutch of software stocks to rally at market open.
—The dollar rose slightly but remained within its recent range in holiday-thinned trade. Ahead of U.S. inflation and growth data due later this week, markets will be looking for clues on the timing of the next interest-rate cut by the Fed in the wake of last week’s strong U.S. jobs data and lower-than-expected inflation data. The DXY dollar index rose 0.1% to 96.967.
The European Central Bank’s move to boost the euro’s global role is positive for the single currency, ING’s Francesco Pesole said in a note. The exchange rate is “strictly tied to capital rotation from the U.S. to Europe,” Pesole said. The euro traded flat at $1.1863.
—Eurozone government bond yields edged lower in early trade, awaiting fresh drivers. As well as closed U.S. markets, there is no eurozone government bond supply and the data calendar is thin. “Bunds may take a breather amid stabilizing risk sentiment and the U.S. holiday, but the constructive duration backdrop is likely to extend ahead of the data reality check on Friday,” Commerzbank’s Rainer Guntermann said in a note. On Friday, flash estimate French, German and eurozone purchasing manager indices will be released for February. The 10-year German Bund yield edged down 0.7 basis points to 2.750%, while the 10-year French OAT yield fell 1.3 basis points to 3.331%, according to LSEG data.
In Japan, the current Japanese government bond curve is no longer embedding any “country risk premium,” Goldman Sachs analysts said in a note. The 10- to 30-year segment is now back to fair value, while the two- to 10-year curve is only 10-15 bps steeper than fair, they said. “The resolution of uncertainty [in the recent Lower House election] in itself was likely sufficient in removing some long-end risk premium,” they said.
—Bitcoin edged lower as investors remained reluctant to push the crypto currency much higher amid fears about the potential artificial-intelligence disruption. Bitcoin fell 0.3% to $68,688, LSEG data showed.
—Oil prices were broadly unchanged in early morning European trade. Brent crude traded flat at $67.75 a barrel, while WTI rose 0.1% to $62.44 a barrel. A large risk premium is still priced into the market given uncertainty over U.S.-Iran tensions, ING analysts Warren Patterson and Ewa Manthey wrote in a note. President Trump’s comments that regime change would be the best outcome for Iran will add to concerns, they wrote. However, peace talks between Ukraine and Russia seem more de-escalatory and could remove some of oil’s risk premium, the analysts said. Should the risk premium reduce, it will allow more bearish oil fundamentals to take center stage and push prices lower, they said.
—Gold traded back above $5,000 a troy ounce after getting a boost from weaker-than-expected U.S. inflation data. This raises the likelihood of near-term Federal Reserve rate cuts, ANZ analysts wrote. Lower borrowing costs typically support non-yielding assets like gold. Swap traders are pricing in about 50% chance of a third rate cut by December, they added. Rate cuts will support inflows into the precious metal, while geopolitical and economic uncertainties will fuel additional demand, they said. In New York, gold futures were down 0.4% at $5,024 a troy ounce.
