US Equity Futures Point Higher to Kickstart the Month

01 Jul 2021 · 3rd Party Analysis

WRITTEN BY ThorFX

In Summary

  • Futures tied to the benchmark indexes hover in a positive area
  • Global markets climb 12% in the first half of 2021, boosted by strong risk appetite

Futures on Wall Street are higher in pre-market hours on Thursday, ahead of the opening bell in New York. The first trading day for July looks set to bring green arrows across the board as all three main indexes hover in the green, led by Dow futures, up some 0.18%, followed by S&P futures, higher by 0.15%. Nasdaq futures are essentially flat to mildly positive.

On Wednesday, shares tied to the economic reopening were in fashion as the Dow Jones Industrial Average advanced 210 points. The S&P500 remained steady but the slight move to the upside was enough for the index to close at a fresh record on the last day of the half-year. The Nasdaq Composite underperformed and turned negative on the day, dragged by shares of Facebook, Google-parent Alphabet, Netflix, and Amazon, all finishing lower.

European markets couldn’t hold on to their gains from recent sessions and dipped into red ink on Wednesday. Still, the major averages across European bourses recorded strong gains for the year-to-date period as market participants cheered the reopening and dived into equities across sectors.

As global markets closed out the second quarter of 2021, trillions of dollars of monetary and fiscal stimulus moved around equities in efforts to sustain and nourish economic growth globally. World shares combined appreciated 12% in the first half of the year, boosted by strong US data despite looming concerns that inflation may derail the accelerating recovery.

Economic Growth Is on the Horizon

The US dollar remained strong throughout June and gained against peers, including the euro, the sterling, the Swiss franc, and the Canadian dollar. Investors flocked to the greenback as a way to protect their portfolio from uncertainties related to the growing spread of the Delta strain across Europe and other parts of the world.

Looking ahead, investors expect economic growth to maintain its upside momentum and balance the threats of rising inflation and pandemic-related worries. Broadly, the focus in the next six months would be on how central banks approach the overheating economy fueled by the continued stimulus. The Federal Reserve’s policy shift would be a key factor for investors who try to make sense of the high valuations of stocks related to their returns overshadowed by high inflation.

In the short term, market participants will be monitoring Friday’s economic reports coming from the US. The US Labor Department will publish its non-farm payrolls report for June. The data, closely monitored by investors and central banks, will reveal how many new jobs were added to the labor market. If hiring picked up in June and indicated the jobs market is on track to return to pre-pandemic levels, the Federal Reserve could be prompted to act by strengthening its hawkish tilt.

Meanwhile, cryptocurrencies remained pressured throughout June. Bitcoin and peers traded to the downside as a wave of bearish news wiped billions from the crypto market valuation. Bitcoin lost roughly 6% in June, while the second-quarter result was strongly negative, down 41% from April through June.

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