(Bloomberg) -- Wall Street was poised to open near record highs on Monday, as investors looked past the inflation implications of a commodity rally and wagered interest-rate cuts will remain on the cards this year.
Contracts on the Nasdaq 100 rose 0.3% and those on the S&P 500 were 0.2% higher. One of the biggest features of this week is Wednesday's earnings release from artificial intelligence bellwether Nvidia Corp. which has driven a major chunk of the S&P 500's gains in 2024 and comprises 5% of its market value. Nvidia shares rose about 1.5% in premarket trading, while other chipmakers including Micron Technology Inc. also advanced.
In Europe, equities got a boost from record-high prices for copper and gold. The Stoxx Europe 600 Index hovered near a record high, led by mining stocks including Glencore Plc and and KGHM SA.
Copper surged to its highest-ever level, lifting futures on the London Metal Exchange above $11,000 for the first time. Gold surpassed its previous peak set in April, as the death of Iranian President Ebrahim Raisi in a helicopter raised concerns of fresh tensions in the Middle East, offering the haven metal a boost. Crude prices held steady, having risen 10% so far this year.
With Bloomberg's commodity index up more than 4% this month, there are fears of a fresh inflation uptick that could take the shine off equities and bonds. Many investors remain confident, however, that price pressures will continue to ease, allowing the Federal Reserve, European Central Bank and others to cut rates in the coming months.
“Fundamentally, investors are not concerned about the health of the economy,” said Gene Salerno, chief investment officer at SG Kleinwort Hambros Bank Ltd. “I am not too worried about the commodity rally as it's only one component of inflation and we are seeing other aspects of inflation, such as the froth in the jobs markets, starting to come off.”
The timing of the Fed's likely pivot to rate cuts has shaped trading across financial markets in recent days. The Dow Jones Industrial Average of blue chips closed above 40,000 for the first time on Friday, while the S&P 500 has hit a series of record highs. That's prompted Morgan Stanley strategist Michael Wilson — a prominent Wall Street bear — to turn positive on the stock market and predict further gains.
Bloomberg's dollar index traded flat, having dropped last week, when data showed US inflation eased more last month than forecast. Ten-year Treasury yields are more than 20 basis points below end-April levels.
However, a number of policymakers have urged caution over cutting rates, with the ECB's Martins Kazaks the latest to warn against hasty cuts after the first move in June. Cleveland Fed President Loretta Mester, New York Fed President John Williams and Richmond Fed President Thomas Barkin all said last week it may take a while for inflation to ease to the 2% target.
Investors will watch for more Fed officials' speeches this week, including from Governor Christopher Waller who will talk specifically about the US economy and monetary policy.
Some key events this week:
- BOE Deputy Governor Ben Broadbent speaks on monetary policy transmission, Monday
- Chile GDP, Monday
- Reserve Bank of Australia issues minutes of May policy meeting, Tuesday
- Canada CPI, Tuesday
- Fed Governor Christopher Waller speaks on the US economy and monetary policy, Tuesday
- BOE Governor Andrew Bailey delivers a lecture, Tuesday
- New Zealand rate decision, Wednesday
- Indonesia rate decision, Wednesday
- South Africa CPI, Wednesday
- UK CPI, Wednesday
- FOMC minutes from April 30-May 1 policy meeting, Wednesday
- Singapore CPI, GDP, Thursday
- South Korea rate decision, Thursday
- India S&P Global Manufacturing & Services PMI, Thursday
- Eurozone S&P Global Services PMI, S&P Global Manufacturing PMI, consumer confidence, Thursday
- US new home sales, initial jobless claims, Thursday
- Chile rate decision, Thursday
- Japan CPI, Friday
- Germany GDP, Friday
- Malaysia CPI, Friday
- US durable goods, University of Michigan consumer sentiment, Friday
Some of the main moves in markets:
Stocks
- The Stoxx Europe 600 rose 0.2% as of 1:08 p.m. London time
- S&P 500 futures rose 0.2%
- Nasdaq 100 futures rose 0.3%
- Futures on the Dow Jones Industrial Average were little changed
- The MSCI Asia Pacific Index rose 0.3%
- The MSCI Emerging Markets Index rose 0.1%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.0862
- The Japanese yen fell 0.1% to 155.82 per dollar
- The offshore yuan fell 0.1% to 7.2430 per dollar
- The British pound was little changed at $1.2696
Cryptocurrencies
- Bitcoin rose 1.4% to $67,076.2
- Ether rose 0.7% to $3,095.1
Bonds
- The yield on 10-year Treasuries was little changed at 4.41%
- Germany's 10-year yield was little changed at 2.51%
- Britain's 10-year yield advanced one basis point to 4.14%
Commodities
- Brent crude fell 0.4% to $83.64 a barrel
- Spot gold rose 0.4% to $2,424.65 an ounce
This story was produced with the assistance of Bloomberg Automation.
--With assistance from Richard Henderson, Matthew Burgess, Hideyuki Sano and Catherine Bosley.
More stories like this are available on bloomberg.com
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