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Bonds Calmer, FDA OK's J&J Vaccine, Zoom Earnings - What's up in Markets

EconomyMar 01, 2021 06:13AM ET
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© Reuters

By Geoffrey Smith 

Investing.com -- Central banks push back against the bond market bears, pushing yields down. The manufacturing recovery in China slows, but Europe's and Japans accelerates. The ISM survey is due at 10 AM, along with construction spending data. The FDA approved Johnson & Johnson (NYSE:JNJ)'s Covid-19 vaccine. Stocks are set to open higher, with Walmart and Zoom Video in focus, and crude oil prices are also up after Iran rejected talks with the U.S., underlining that the path to lifting sanctions on its exports will be long and bumpy. Here's what you need to know in financial markets on Monday, March 1st.

1. Australia leads central bank pushback against bond bears 

The bond market volatility that dominated last week’s trading has subsided, with the first concrete sign of central banks pushing back against those pushing yields higher in anticipation of higher inflation.

The Reserve Bank of Australia bought twice the scheduled amount of long-term bonds at its regular quantitative easing operation overnight, following on from its intervention to keep three-year bond yields at their target level last week. The European Central Bank will also publish later details of its bond purchases last week, which should show how keen the ECB was to avoid what it calls an “unwarranted tightening of financial conditions.”

The Federal Reserve’s John Williams and Lael Brainard may both weigh in on the bond market developments in speeches at 9 AM ET (1400 GMT) and 9:05 (1405) AM ET, respectively. The yield on the U.S. 10-Year note fell back to 1.43% overnight, while the German 10-Year yield fell to -0.30%.

2. China recovery plateaus but Japan, Europe pick up speed; ISM survey due

The economic rebound underlying that bond market sell-off appeared largely intact in the latest round of business surveys around the world. The Japanese purchasing managers index rose to its highest in over two years, while South Korea posted another strong month of exports and imports.

Final PMIs for February were also revised up across most of Europe, with Eurozone manufacturing posting its best reading since early 2018, at 57.9, and the U.K. manufacturing PMI being revised up to 55.1.

China’s Caixin PMI, however, fell to its lowest in nine months. Analysts said the figures were distorted by the timing of the Lunar New Year holiday, but the monthly drop was the third in a row and took the index to its lowest in nine months, suggesting that China’s manufacturing recovery is plateauing.

The Institute of Supply Management's manufacturing survey is due at 10 AM ET, along with data on construction spending.

3. Stocks set to open higher after House passes Covid relief bill

U.S. stock markets are set to open higher against the calmer bond market backdrop, able to focus on the progress of the administration’s $1.9 trillion stimulus bill on Saturday.

By 6:20 AM ET, Dow Jones futures were up 273 points, or 0.9%, while S&P 500 futures were up 1.0% and Nasdaq 100 futures were up 1.2%, all three indexes trimming overnight gains somewhat.

Stocks likely to be in focus later include Walmart (NYSE:WMT), which was reported at the weekend to have hired two senior Goldman Sachs (NYSE:GS) executives to accelerate its plans for a banking operation. The reports may also have a read-across to consumer banking stocks, given the implications for tougher competition.

While earnings season is all but over, Zoom Video Communications’ quarterly update is likely to garner attention, given the recent cooling in the stock price on fears that the Working-From-Home boom may have peaked as the economy prepares to reopen.

4. FDA authorizes Johnson & Johnson vaccine

The reopening process got a fresh boost at the weekend as the Food and Drug Administration gave emergency use authorization to Johnson & Johnson’s single-shot vaccine against Covid-19.

The J&J drug is the third vaccine to receive EUA in the U.S. and promises to expand the supply of safe and effective drugs against Covid-19 significantly. Preliminary data suggest it is also largely effective in stopping the spread of disease by people who don’t have symptoms of the disease, an important source of transmission.

Elsewhere, reports suggested that Germany is to reconsider its decision not to approve AstraZeneca’s vaccine for use by over-65s, a decision that has slowed the rollout of vaccines in Europe’s largest economy.

5. Crude oil resumes rally as Iran rejects talks with U.S.

Crude oil futures resumed their upward march against a backdrop of broader risk appetite. Also supporting the move was news over the weekend that Iran had rejected an offer of direct talks with the U.S. over a return to the 2015 UN-backed non-proliferation agreement.

Both the U.S. and Iran are currently in breach of the agreement, with Iran refining uranium metal that analysts say can be adapted for use in nuclear bombs, and the U.S. applying sanctions that have badly hurt Iranian crude exports and the rest of its economy.

By 6 AM ET, U.S. crude futures were up 1.3% at $62.30 a barrel, while Brent crude was up 1.2% at $65.21 a barrel. 

Analysts say the rally  may be challenged by the start of maintenance season at China’s refineries, slowing demand for crude imports for a while.

Bonds Calmer, FDA OK's J&J Vaccine, Zoom Earnings - What's up in Markets
 

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Comments (10)
Luqman Firdaus
Luqman Firdaus May 03, 2021 6:11AM ET
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قاسم جبار
قاسم جبار May 03, 2021 6:11AM ET
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Cristian Romas
Cristian Romas Mar 14, 2021 1:21PM ET
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cuestan
Oliver Brecht
Oliver Brecht Mar 01, 2021 9:50AM ET
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simple question, who is buying?
perplexed76 .
perplexed76 . Mar 01, 2021 8:52AM ET
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everything is great. But why the dollar rises and bonds seem to be back to rise.
michael engel
michael engel Mar 01, 2021 7:18AM ET
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NDX Positive Reversal is about over, at least for a while.
Junk Man
Junk_Man Mar 01, 2021 7:11AM ET
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FED doesn't have a choice but to intervene in the bond market...
Jim Jones
Jim Jones Mar 01, 2021 6:47AM ET
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Good to see the USA socialist stance on supporting the stock markets are spreading.
Stephen Be
Stephen Be Mar 01, 2021 6:44AM ET
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Tthe US WELCEHED on a deal that Iran was honoring and all the other signatories were content with. Trump caused this and America not only owes Iran an APOLOGY, but restitution as well. Presidential treason should be prosecuted with a rope, not a pension and a library.
michael engel
michael engel Mar 01, 2021 6:44AM ET
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Iran is trying to hang Israel and dominate the Sunni world.
Stephen Be
Stephen Be Mar 01, 2021 6:44AM ET
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michael engel   SO? The US has become the SOVIET UNION of the 21st Century. The FRAUD of the previous administration is criminal. YOU willfully ignore that reality. DO THE MATH.  More Americans died in the US Capitol at the DIRECT COMAND of an election loser than Hillary Clinton " killed " @ Benghazi.  Let's have EIGHT INVESTIGATIONS into the TRUMP's SERIAL TREASON against 200 Million Americans with the support of  rabidly radicalized trailer parkers.
michael engel
michael engel Mar 01, 2021 6:44AM ET
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Stephen Be  paramilitary forces built a Chaz in Seattle, a Chop in Portland and a bridgehead to Acab the white house.
Stephen Be
Stephen Be Mar 01, 2021 6:44AM ET
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michael engel  Bbble allyouwant, deleting from the TRUTH OF REPUBLICAN PART YTREASON will not go away. Especially if the House votes EXPEL all those perpetuating the GREAT Voter Fraud FRAUD of the GOP. The DEMS will lose base if they DO NOT PROSECUTE. Let's see how many RED resignations we get by July 4th. You know, the Holiday Trump 'originated'.
michael engel
michael engel Mar 01, 2021 6:43AM ET
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1) Covid bill to build a subway tunnel. 2) WFH vacuumed commercial RE. 3) Fracking on a fault line can cause an earthquake in SF.
michael engel
michael engel Mar 01, 2021 6:43AM ET
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Stephen Be  Direct COMMAND from Iran.
Ronnie Strickland
Ronnie Strickland Mar 01, 2021 6:43AM ET
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Music therapy for depression
 
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