(Bloomberg) — U.S. index futures gained along with European stocks as upbeat earnings and a surge in corporate dealmaking lifted sentiment, offsetting lingering concerns over China’s regulatory crackdown and the spread of the delta virus variant.
S&P 500 and Nasdaq 100 contracts climbed as a $550 billion infrastructure package steps closer to passage in the Senate this week. Treasuries were steady and the dollar dipped.
The Stoxx Europe 600 index started the month by rising to a record after earnings beats from the likes of HSBC Holdings Plc, Axa SA and Heineken NV, though the gauge pared its advance as Allianz SE slumped after saying a U.S. probe may hit results. Aerospace company Meggitt Plc soared more than 60% after agreeing to a $8.8 billion takeover by U.S.-based Parker-Hannifin Corp., the latest in a string of buyouts in the sector.
The euro edged higher after data showed factories in the common-currency region are hiring new workers at record pace to keep up with persistently strong orders. Hong Kong and China stocks rose, paring some of last week’s rout sparked by Beijing’s clampdown on everything from technology to private education and property.
Global stocks in July completed their longest winning streak since 2018, but the pace of gains was the slowest in the six-month winning stretch. Corporate earnings have generally aided equities, while the latest euro-area manufacturing data showed the recovery is on track, though concerns about supply bottlenecks and rising prices remain. Other risks include the impact of the delta virus strain on the world economy, as well as China’s push for more control over some of its major companies.
“Shares remain at risk of a short-term correction or volatility as coronavirus cases rise globally, the inflation scare continues and as we come into seasonally weaker months, but surging company profits in the U.S. and lower bond yields are providing support,” Shane Oliver, head of investment strategy and chief economist at AMP Capital, said in a note.
Other manufacturing reports were mixed. Purchasing-manager readings from China implied a steadier recovery ahead, and the nation’s much-watched Politburo meeting on Friday signaled more targeted support for the economy to cushion growth in the face of resurgent pandemic risks.
Elsewhere, Minneapolis Fed President Neel Kashkari said the Covid-19 delta strain could keep some Americans from looking for work, potentially harming the U.S. recovery. The latest updates on U.S. jobs are due later this week.
Crude oil retreated as traders weighed the China outlook and monitored a rise in tensions between Iran and the U.S. Bitcoin slipped back below $40,000, reversing a weekend rally.
Here are some key events to watch this week:
Earnings are due this week from Alibaba, BP, Toyota, Uber, Roku, Moderna, KKRReserve Bank of Australia policy decision…
Read More: Futures Rise Amid Earnings Optimism; Dollar Dips: Markets Wrap