Stocks are set for their strongest back-to-back gains since late February as talks between Russia and Ukraine show progress and China vows to add more support to the world’s second-largest economy.
U.S. equity futures extended gains Wednesday, with Treasury bond yields moving firmly higher, as investors reacted to a pledge from authorities in China to support the Covid-hit economy while bracing for today’s Federal Reserve rate decision later this afternoon.
China Vice Premier Liu He said Beijing would roll out a series of measures in the coming weeks to support growth in the world’s second largest economy, which is seeing a worrying spike in coronavirus infection, while pledging at the same time to ensure financial market stability.
The move powered China stocks sharply higher, and lifted the region-wide MSCI ex-Japan index from its nineteen-month low into a 4.2% gain that spilled over into the European session.
Hopes of near-term peace talks between Russia and Ukraine, where fighting has entered its 21st day, also lifted sentiment, with President Joe Biden pledging further relief to Kyiv as he prepared for meeting of NATO leaders in Brussels on March 24.
Ukrainian President Volodymyr Zelenskiy said Russia has become “more realistic” in recent negotiations with Kyiv, and more talks with Foreign Minister Sergei Lavrov were scheduled for later today.
Zelenskiy is also slated to deliver a virtual address to a joint session of Congress at 9:00 am Eastern time.
Investors are also tracking Russia’s ability to pay around $117 million in interest on two dollar-denominated bonds, due today, following sanctions that have kept its central bank from tapping U.S. dollar reserves.
Stocks Leap, Fed In Focus, Apple, Tesla And Live Nation – 5 Things You Must Know
On Wall Street, benchmark 10-year Treasury note yields eased to 2.165% in early New York trading ahead of today’s Fed rate decision at 2:00 pm Eastern time, with markets looking to comments from Chairman Jerome Powell for direction on the central bank’s rate path in the face of slowing growth and faster inflation prospects.
The CME Group’s FedWatch tool sees a 98.3% chance of the Fed lifting its base rate to between 0.25% and 0.5% this afternoon, with bets now set on how many further hikes the economy — which is slowing notably but its still expanding — can withstand throughout the rest of the year.
Futures futures contracts linked to the Dow Jones Industrial Average are indicating a 365 point opening bell gain heading into the start of trading, while those linked to the S&P 500 are priced for a 48 point move to the downside.
The tech-focused Nasdaq Composite is also called higher, with a 250 point gain, as benchmark 2-year Treasury note yields hold at $1.861% in overnight trading.
In terms of individual stocks, Live Nation Entertainment (LYV) – Get Live Nation Entertainment, Inc. Report shares moved lower after two Senate lawmakers urged the Department of Justice to probe the group’s ‘exorbitant fees’ for concert and event tickets.
Tesla (TSLA) – Get Tesla Inc Report shares powered higher in pre-market trading despite concerns linked to the closure of its Shanghai gigafactory linked to the Chinese city’s recent Covid outbreak.
Apple (AAPL) – Get Apple Inc. Report shares gained 1.8%, alongside a solid move higher for the Nasdaq, even as its biggest and most important supplier cautioned it may not have certainty on supply chain disruptions until later in the year.
Foxconn (FXCNY) , the world’s biggest electronics manufacturer, said sales for the coming year could fall by as much as 3%, or grow by 3%, owing to supply chain uncertainty and the impact of Covid infections and shutdowns in the Asia region.
