US futures head to more record highs ahead of big tech earnings, while oil climbs despite raging global pandemic
- US futures rose on Tuesday morning, the day after the S&P and Nasdaq hit record highs.
- Investors eagerly awaited Q1 earnings from Microsoft and Alphabet, and weighed up Tesla's results.
- Oil prices climbed as the demand outlook brightened, despite the ongoing COVID-19 pandemic.
US futures climbed on Tuesday after stocks hit record highs the previous day, with strong growth expectations and optimism ahead of company earnings cheering investors on Wall Street.
Futures for the tech-heavy Nasdaq 100 index climbed 0.15% after it came within a whisker of an all-time high on Monday. The bigger Nasdaq Composite index hit its first record high since February, helped by the recent drop in bond yields.
S&P 500 futures climbed 0.11% after the index also hit a record high on Monday. Dow Jones futures rose 0.09%.
In Asia overnight, China's CSI 300 rose 0.26% after a late rally, but Japan's Nikkei 225 finished 0.46% lower. HSBC's Hong Kong shares rose 2% after it posted a better-than-expected pre-tax profit of $5.8bn, up 79% year on year.
Europe's continent-wide Stoxx 600 slipped 0.08%. The UK's FTSE 100 was roughly flat despite oil major BP climbing 0.56% after it too beat first-quarter profit estimates following a rally in commodity prices.
The rise in US stocks to new highs came ahead of a blockbuster week of earnings, which was kicked off by Tesla on Monday. The carmaker posted a record profit of $438 million but its shares fell 3% pre-market trading, due in part to a lack of specific vehicle delivery estimates for 2021.
"US earnings session hits top gear this evening," Jeffrey Halley, senior market analyst at Oanda, said.
"Most attention, though, will be on the technology titans Microsoft and [Google parent company] Alphabet. Apart from the headline numbers, which should be spectacular, most attention will be focused on their growth outlooks and whether those expectations are reined in as the world reopens."
The reopening of countries after lockdowns led a technical committee for the OPEC group of oil exporters to increase its estimates for demand in 2021, according to reports. This in turn helped Brent crude futures climb 0.68% to $65.49 a barrel on Tuesday, while WTI crude rose 0.71% to $62.34 a barrel.
Oil gained despite the fact that COVID-19 continues to rage around the world, with India bearing the brunt of the ongoing pandemic.
The rapid rollout of vaccines in some countries is set to power a globally unequal recovery from the virus, economists say.
But things are looking bright for US investors. The US Federal Reserve begins its two-day interest rate meeting Tuesday, and is expected to keep monetary policy very loose over the medium-term.
Bond yields rose sharply in February, which weighed on stocks, but have since slipped back sharply, making equities look attractive once again. The yield on the key 10-year US Treasury note was up 1.3 basis points to 1.583% on Tuesday, well off highs of more than 1.75% reached at the end of March.
BlackRock analysts, led by Jean Boivin, said in a note on Tuesday: "US activity looks set to restart strongly this year, powered by pent-up demand across income cohorts and sky-high excess savings.
"Growth forecasts have been catching up... but the magnitude of the restart may still be underappreciated."