Monday April 4th


Stock futures are little changed to start the week

U.S. Stock index futures were mostly flat Monday, as traders monitor the bond market’s warning signals about the economy. Futures contracts tied to the Dow Jones Industrial Average traded 40 points lower. S&P 500 futures were flat and Nasdaq 100 futures advanced 0.1%. Twitter shares surged more than 25% after SEC filings revealed Elon Musk purchased a more than 9% passive stake in the social media company. It comes less than a week after Musk polled his followers, questioning whether the social media giant follows free speech principles. Based on Twitter’s Friday closing price, the stake is worth $2.89 billion. Tesla shares ticked 1% higher after the company reported on Saturday its latest quarterly electric vehicle delivery figures. The company delivered more than 310,000 EVs in the first quarter, up from 184,800 in the year-earlier period. Starbucks shares also dipped about 1% after the coffee chain suspended its share repurchase program. An often-cited recession signal was triggered Thursday evening when the 2-year and 10-year Treasury yields inverted for the first time since 2019. The 5-year note yield is also trading above its 30-year counterpart. “We think the current flattening is due to the concern that the Fed is behind the curve on hikes and will tighten policy beyond neutral, which will hurt growth,” TD Securities said in a note to clients. Meanwhile, oil moved higher with WTI crude jumping 3% and back above $100 a barrel. Brent crude rose about 2.6%. Investors are also monitoring the latest developments in Ukraine. German Chancellor Olaf Scholz said Sunday that Western nations will impose additional sanctions on Russia in the coming days. “Equity and bond markets continued to send conflicting signals about the economic outlook,” UBS said in a recent note to clients. “We caution against over-interpreting either signal. Yield curve inversions have historically predicted recessions with a long and uncertain lag, while hopes over cease-fire talks have ebbed and flowed,” the firm added. Wall Street is coming off a winning session, with the Dow, S&P 500 and Nasdaq all posting gains Friday. The S&P 500 also posted its third straight week of gains. Seasonally, April is generally one of the best months for stocks, edging higher in the last 20 years by 2.41% on average, MKM Partners’ JC O’Hara wrote in a note. Within 16 of the last 17 Aprils, the S&P has also inched higher. Friday’s positive session came despite March’s employment report, which fell short of economists’ estimates. The U.S. economy added 431,000 jobs during the month, while estimates from Dow Jones called for 490,000. “Strong gains on the employment front continue to signal a green light for investors despite multi-decade highs in inflation and concerns over higher rates and Fed tightening,” noted Peter Essele, head of portfolio management for Commonwealth Financial Network. “The economy appears to be in exit velocity mode, with the only concern being the amount of labor supply available to fuel the robust recovery,” he added. On Wednesday the Federal Open Market Committee will publish the minutes from the central bank’s March meeting, giving investors a deeper understanding into how the Fed views market conditions. Hong Kong’s Hang Seng index led gains among the major Asia-Pacific markets on Monday as Chinese tech stocks in the city jumped. The Hang Seng index gained 2.1% to close at 22,502.31 as shares of Tencent surged 2.96%. Other Chinese tech stocks also rose — Alibaba was up 3.65% while NetEase soared 6.62%. Markets in mainland China are closed on Monday and Tuesday this week for holidays. The Nikkei 225 in Japan swung between positive and negative territory in Monday trading before closing 0.25% higher at 27,736.47. The Topix index climbed 0.48% to 1,953.63. South Korea’s Kospi climbed 0.66% on the day to 2,757.90. Oil rose on Monday in volatile trade as the release of strategic reserves by consuming nations failed to eliminate supply fears arising from Russia’s invasion of Ukraine and the lack of an Iranian nuclear deal.The invasion in February heightened supply concerns that were already underpinning prices. Sanctions imposed on Russia and buyers’ avoidance of Russian oil have already led to a drop in output and raised fears of larger losses. “Will the release of barrels from strategic reserves fill a shortfall caused by sanctions and buyer aversion to Russian oil? In a word, no,” said Stephen Brennock of oil broker PVM. Brent crude was up $2.72, or 2.6%, at $107.11 per barrel. U.S. West Texas Intermediate crude was $3.01, or 3%, higher at $102.32. Both contracts were down more than $1 earlier in the session. Gold prices were steady on Monday as the dollar and Treasury yields firmed following a solid U.S. payrolls report that raised expectations of aggressive rate hikes, while a worsening Ukraine crisis supported safe-haven bids for bullion. Spot gold was little changed at $1,925.97 per ounce. U.S. Gold futures was up 0.3% to $1,929.70.