US Futures Hit All Time High As Santa Rally Spreads Markets Cheer

The Santa Claus rally is here, and stocks are set to make their 69th all-time high for 2021 when they open in 90 minutes.

US index futures rose to fresh all time highs despite amid thin, holiday-muted trading and a mood of caution as traders evaluated spiking coronavirus cases as investors monitored progress on the Biden administration’s economic stimulus and social spending plan after president-in-waiting Kamala Harris said neither her nor Joe Biden are giving up on the bill. Futures on the S&P 500 and the Nasdaq 100 futures both climbed 0.3% at 745 a.m. in New York, the former trading at all time highs of 4,733. The dollar strengthened, 10-year U.S. Treasury yields were little changed while crude oil and gold dipped. A dollar gauge ticked up.

In overnight news, Kamala Harris said the Biden administration is seeking a path forward for its “Build Back Better” economic stimulus. Elsewhere, US holiday sales jumped 8.5% from last year as consumers spent more money on clothes, jewelry and electronics, a report from Mastercard SpendingPulse showed. Still, in U.S. premarket trading, U.S. travel stocks retreated, led by United Airlines Holdings Inc., after hundreds of flights were canceled over Christmas due to a spike in Covid-19 cases. Here are some of the more notable premarket movers:

• United Airlines Holdings (UAL US) -2.9%, Delta Air Lines (DAL US) -2% and American Airlines (AAL US) -2.1%.
• Velo3D (VLD US) rose in afterhours trading Thursday after announcing delivery of its first Sapphire XC to an aerospace customer.
• Surgalign Holdings (SRGA US) dropped in postmarket after filing for the potential sale of equity and debt securities.

In the latest covid developments, Anthony Fauci, one of the top U.S. medical advisers, said Americans should stay vigilant because omicron cases can still overwhelm hospitals even if evidence suggests the strain’s symptoms may be less severe.

That said, the predominant thread was one of lack of trading as most desks have closed for the year: for markets overall, “either the headline reel will spur ugly intraday moves on holiday-thinned liquidity, or volatility will remain so flatline, that if it were an ECG, the doctors and nurses would be yelling code blue,” Jeffrey Halley, a senior market analyst at Oanda, wrote in a note.

In Europe, stocks edged up amid thinner trading volumes as investors monitored the surge in Covid-19 cases.

Over the weekend, China’s central bank pledged greater economic support over the weekend, contrasting with steps by the Federal Reserve and other central banks to fight inflation by cutting stimulus. The outlook for monetary policy, Covid and company earnings are shaping views on whether global stocks can keep rising after nearly doubling from pandemic lows.

Asian stocks slipped in thin trading ahead of the year-end holidays as investors weighed the latest developments in virus cases related to the omicron variant.  The MSCI Asia Pacific Index swung between a loss of 0.2% and a gain of less than 0.1%. Hardware technology giants provided the biggest support to the measure as chipmakers advanced, while industrial names and software companies fell. Coronavirus cases surged across the globe, with China reporting over the weekend the highest number of local cases since January. Singapore plans to make vaccination a condition for the approval of new applications for and renewal of existing long-term passes, work passes, and permanent residences starting Feb. 1. “While there is worry that infections will continue to spread, the sense is that it’s not likely to develop into serious cases or trigger another series of lockdowns,” said Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management. “I still see room for share price gains during the few trading days left this year.”  The Asian stock benchmark rose 0.4% last week, with sentiment boosted by positive U.S. economic-growth data and a U.K. study suggesting omicron infections are less likely to lead to hospitalization.   Benchmarks in South Korea and Japan were among the worst performers in the region for the day, while Malaysian and Philippine stocks outperformed. Markets in Australia, New Zealand and Hong Kong are shut for the holidays.

India’s benchmark equity index advanced, overcoming a weak start to the session, boosted by gains in Tech Mahindra Ltd.  The S&P BSE Sensex rose 0.5% to 57,420.24 in Mumbai, reversing losses of as much as 1%. The NSE Nifty 50 Index also climbed by a similar measure. Sixteen of the 19 sector sub-indexes compiled by BSE Ltd. gained, led by a gauge of healthcare companies. Tech Mahindra Ltd. rose 3.6% and was the best performer on both key indexes. Out of 30 shares in the Sensex index, 24 rose and 6 fell. Private sector lender RBL Bank Ltd. dropped 18.5% after a decision by the nation’s central bank to appoint a new director to the board raised concerns about the outlook for the small private-sector lender. India also announced a program to vaccinate teenagers from the ages of 15 to 18 starting next year and booster doses for health-care workers as omicron-fueled Covid-19 cases spike. The announcement was made by Prime Minister Narendra Modi over the weekend. Still, several states have imposed night curfews and restrictions on public gatherings to keep a check on the spread of the new variant.  “Markets are facing pressure on every rise and it would only subside if the cases tally remains under control,” Ajit Mishra, vice president of research at Religare Broking Ltd. wrote in a note. “We recommend keeping a check on leveraged positions amid volatility and letting the markets stabilize.”

In FX, the Bloomberg Dollar Index rose as much as 0.2%, rebounding from its lowest level in more than a month; the New Zealand dollar and the Norwegian krone led declines among G-10 peers. The pound outperformed peers following a report that Chancellor of the Exchequer Rishi Sunak plans to cut tens of thousands of jobs within the U.K. civil service to save government budgets 5% over the next three years. Turkey’s lira snapped a five-day rally, challenging government assurances that it’s on a more stable footing after measures were introduced a week ago to stem its collapse.

In rates, 10- year Treasury yields dipped 1bp to 1.49% after rising nine basis points last week. Treasuries were mixed with short-maturity yields higher on the day as the final week of the year begins, ahead of $56b 2-year note auction at 1pm ET. Amid expectations that Fed will start raising interest rates next year, last month’s 2-year auction tailed by more than 1bp. Yields are higher by 1bp-2bp in 2- to 5-year sectors with longer-maturity tenors little changed, flattening curve spreads slightly; 10-year at 1.494% is inside last week’s range. WI 2-year yield at ~0.76% exceeds auction stops since February 2020; last month’s drew 0.623%. The auction cycle includes $57b 5-year note Tuesday, $56b 7-year Wednesday.

Expected data include the Dallas Fed Manufacturing Outlook survey. No major earnings or central bank events are scheduled.

Market Snapshot

• S&P 500 futures up 0.2% to 4,724.50
• STOXX Europe 600 up 0.3%
• German 10Y yield up 2 bps to -0.23%
• Euro little changed at $1.1310
• MXAP down 0.2% to 191.83
• MXAPJ little changed at 624.02
• Nikkei down 0.4% to 28,676.46
• Topix down 0.4% to 1,977.90
• Hang Seng Index up 0.1% to 23,223.76
• Shanghai Composite little changed at 3,615.97
• Sensex up 0.5% to 57,433.95
• Australia S&P/ASX 200 up 0.4% to 7,420.30
• Kospi down 0.4% to 2,999.55
• Brent futures little changed at $76.06/bbl
• Gold spot down 0.3% to $1,805.61
• U.S. Dollar Index up 0.2% to 96.22

Top Overnight News from Bloomberg

• The Biden administration is seeking a path forward for its “Build Back Better” economic stimulus and social spending plan, Vice President Kamala Harris said Sunday
• Coronavirus infections surged across the globe with China reporting the highest number of local cases since January, darkening the year-end holiday period
• China’s central bank pledged greater support for the economy on Saturday and said it will make monetary policy more forward-looking and targeted

US Event Calendar

• 10:30am: U.S. Dallas Fed Manf. Activity, Dec., est. 13.0, prior 11.8