U.S. stock futures rise as stimulus talk weighed

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(Oct 9): U.S. equity futures opened higher after the White House appeared to shift tack and signaled the Trump administration is again leaning toward a large-scale stimulus bill. Crude oil surged ahead of a storm.

S&P 500 contracts were about 0.4% higher following news that Treasury Secretary Steven Mnuchin told Nancy Pelosi that President Donald Trump wants agreement on a comprehensive aid package. Australian shares opened modestly higher, while futures were little changed in Japan, and rose in Hong Kong. All eyes will be on the reopening of Chinese markets Friday after a week-long holiday.

The U.S. benchmark earlier closed up despite conflicting comments from Trump and Pelosi that whipsawed markets. Crude oil climbed as Hurricane Delta approached the already battered Louisiana coast. Treasuries earlier ticked higher and the dollar slipped.

Global equities are edging back toward last month’s all-time high with investors increasingly betting that a Joe Biden victory in the November election and gains by Democrats in Congress will support stocks. The scenario seems to be somewhat quelling volatility even as risks from a split in government to a resurgence of coronavirus cases threaten the economic rebound. Trump’s doctor said he expects the president to safely return to public engagements by Saturday following treatment for Covid-19.

We are seeing “an increasing probability of, let’s call it, the blue wave,” Abby Joseph Cohen, senior investment strategist at Goldman Sachs Group Inc., said on Bloomberg TV. That “might not be such a bad thing, because that would give us more certainty with regard to policy, particularly with the use of fiscal policy to help our economy at this point.”

Prospects for an agreement on a stimulus package in Washington remain uncertain after Trump pulled his negotiators out of talks on a comprehensive deal Tuesday, leaving some investors doubting progress will be made prior to next month’s presidential election.

“We are pretty skeptical that you’ll see anything before the election,” Libby Cantrill, head of public policy at Pacific Investment Management Co., said on Bloomberg TV. “We probably won’t see any additional support for the economy until January 2021 maybe at the earliest.”

Elsewhere, Eaton Vance Corp. jumped after the investment firm agreed to be taken over by Morgan Stanley. IBM surged after saying it will spin off its infrastructure unit.

These are the main moves in markets:

Stocks

  • S&P 500 futures advanced 0.5% as of 8:13 a.m. in Tokyo. The gauge rose 0.8%.
  • Futures on Japan’s Nikkei 225 were little changed.
  • Hang Seng futures earlier added 0.5%.
  • Australia’s S&P/ASX 200 Index was little changed.

Currencies

  • The Bloomberg Dollar Spot Index fell less than 0.1%.
  • The yen was at 106.03 per dollar.
  • The offshore yuan was at 6.7386 per dollar.
  • The euro bought US$1.1761.

Bonds

  • The yield on 10-year Treasuries was at 0.79%.
  • Australia’s 10-year yield was steady at 0.87%.

Commodities

  • West Texas Intermediate crude rose 0.7% to US$41.46 a barrel.
  • Gold traded at US$1,896.11 an ounce, little changed.