Market Analysis

The major U.S. index futures are currently pointing to a higher opening on Monday following the starkly mixed performance seen in the previous session.

The upward momentum on Wall Street comes as optimism about coronavirus vaccine rollouts and the economic outlook have overshadowed recent concerns about an increase in treasury yields.

Johnson & Johnson's (JNJ) single-shot Covid-19 vaccine received emergency use authorization from the FDA on Saturday, paving the way for its distribution.

The House of Representatives also passed a $1.9 trillion coronavirus relief package early Saturday, adding to optimism about further stimulus.

Following the sell-off seen during trading on Thursday, stocks saw considerable volatility over the course of the trading day on Friday. While a rebound by tech stocks contributed to an advance by the Nasdaq, the Dow posted a steep loss.

The Nasdaq climbed 72.91 points or 0.6 percent to 13,192.34 after ending Thursday's trading at its lowest closing level in a nearly month. Meanwhile, the Dow plunged 469.64 points or 1.5 percent to 30,932.37 and the S&P 500 fell 18.19 points or 0.5 percent to 3,811.15.

Despite the mixed performance on the day, the major averages all moved notably lower for the week. The Nasdaq plummeted by 4.9 percent, the S&P 500 tumbled by 2.4 percent and the Dow slumped by 1.8 percent.

The volatility seen over the course of the trading session came as traders kept a close eye on activity in the bond markets following the recent spike in yields.

Yields also fluctuated as the day progressed, rebounding near the unchanged line after seeing early weakness before moving to the downside in afternoon trading.

The fluctuations in the bond markets came following the release of another batch of largely upbeat U.S. economic data.

A report from the Commerce Department showed U.S. personal income skyrocketed in the month of January, reflecting the issuance of $600 stimulus checks.

The Commerce Department said personal income spiked by 10.0 percent in January after rising by 0.6 percent in December. Economists had expected personal income to soar by 9.5 percent.

The report also showed a significant rebound in personal spending, which surged up by 2.4 percent in January after falling by a revised 0.4 percent in December.

Economists had expected personal spending to jump by 2.5 percent compared to the 0.2 percent dip originally reported for the previous month.

However, the report also showed inflation remained relatively tame. A reading on inflation said to be preferred by the Federal Reserve showed the annual rate of core consumer price growth ticked up to 1.5 percent in January from 1.4 percent in December.

Concerns about inflation have recently weighed on treasuries despite Fed Chair Jerome Powell's repeated assurances the central bank plans to maintain interest rates at near-zero levels for the foreseeable future.

A steep drop by shares of Salesfore (CRM) weighed on the Dow, with the business software company tumbling by 6.3 percent after reporting better than expected fourth quarter results but providing a disappointing profit forecast.

Gold stocks showed a substantial move to the downside on the day, dragging the NYSE Arca Gold Bugs Index down by 4.8 percent to its lowest closing level in ten months. The sell-off by gold stocks came amid a steep drop by the price of the precious metal.

Significant weakness was also visible among steel stocks, as reflected by the 3.1 percent slump by the NYSE Arca Steel Index. The index pulled back further off the nearly nine-year closing high set on Wednesday.

Energy stocks also saw considerable weakness amid a sharp pullback by the price of crude oil, moving notably lower along with banking, utilities and commercial real estate stocks.

On the other hand, semiconductor stocks showed a strong move to the upside on the day, driving the Philadelphia Semiconductor Index up by 2.3 percent.

Commodity, Currency Markets

Crude oil futures are climbing $0.74 to $62.24 a barrel after plummeting $2.03 to $61.50 a barrel last Friday. Meanwhile, after plunging $46.60 to $1,728.80 an ounce in the previous session, gold futures are rising $8.70 to $1,737.50 an ounce.

On the currency front, the U.S. dollar is trading at 106.73 yen versus the 106.57 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is trading at $1.2051 compared to last Friday’s $1.2075.

Asia

Asian stocks rose broadly on Monday, reflecting investor optimism about the coronavirus vaccine rollout and the stimulus-driven global economic recovery.

Johnson & Johnson's single-shot Covid-19 vaccine received emergency use authorization from the FDA on Saturday, paving the way for its distribution.

U.S. President Joe Biden scored his first legislative win as the House of Representatives passed his $1.9 trillion coronavirus relief package early Saturday.

Chinese shares rose after the latest survey from Caixin showed the manufacturing sector in China continued to expand in February, albeit at a slower pace, with a manufacturing PMI score of 50.9, down from 51.5 in January.

The benchmark Shanghai Composite Index gained 42.32 points, or 1.2 percent, to end at 3,551.40, while Hong Kong's Hang Seng Index jumped 472.36 points, or 1.6 percent, to 29,452.57.

Japanese stocks posted strong gains as focus shifted to the Bank of Japan's two-day policy meeting through March 19 and the lifting of the coronavirus-related state of emergency in six prefectures outside the Tokyo region.

There was some cheer on the data front, with a survey showing that Japan climbed into expansion territory in February with a 22-month high manufacturing PMI score of 51.4.

The Nikkei 225 Index rallied 697.49 points, or 2.4 percent, to 29,663.50 - the biggest daily point gain in nearly nine months. The broader Topix closed percent higher at 1,902.48.

Real estate and healthcare stocks were among the top gainers. Tech shares rebounded from Friday's losses, with Tokyo Electron, Screen Holdings and Advantest climbing 2-4 percent.

Australian markets rallied after pandemic-related restrictions were eased in some of the country's most populous states. The benchmark S&P/ASX 200 Index climbed 116.30 points, or 1.7 percent, to 6,789.60, while the broader All Ordinaries Index ended up 102.10 points, or 1.5 percent, at 7,042.70.

Tech shares rebounded, with Afterpay surging 5.1 percent and Altium gaining 2.7 percent. Healthcare stocks also rose broadly, with heavyweight CSL rising 2.9 percent.

The big four banks rose between 1.6 percent and 3.1 percent. Gold miners succumbed to selling pressure as bullion prices slumped on a stronger dollar and elevated U.S. Treasury yields. Evolution Mining and Northern Star Resources both fell about 2.6 percent.

Shipbuilder Austal soared 8.4 percent on new order win. Airline Regional Express jumped 6.6 percent after announcing more flights to Adelaide and Australia's Gold Coast.

In economic news, reports on manufacturing, company profits and housing loan commitments proved to be a mixed bag.

Europe

European stocks have rallied on Monday as expectations of a faster economic recovery and stimulus hopes helped investors shrug off inflation fears.

Eurozone PMI Manufacturing was finalized at a three-year high of 57.9 in February, up from January's 54.8, adding to optimism about the economic recovery.

While the German DAX Index is up by 1.1 percent, the French CAC 40 Index and the U.K.’s FTSE 100 Index are up by 1.4 percent and 1.5 percent, respectively.

Danone SA shares have jumped. The food company has reached an agreement with COFCO Dairy Investments Limited to convert Danone's stake in China Mengniu Dairy Co. Ltd., currently held indirectly, into a direct holding.

Hopes of a vaccine-led economic recovery and more U.S. stimulus boosted commodity-related stocks, with miners Anglo American, Antofagasta and Glencore moving notably higher.

Housebuilding stocks are also rallying in the U.K. amid hopes that Finance Minister Rishi Sunak would unveil measures to buy homes buyers.

Pharmaceutical company AstraZeneca has also risen after reportedly selling its 7.7 percent stake in Moderna Inc for more than $1 billion.

British Airways-owner IAG have also moved sharply higher on expectations of a rebound in travel demand during summer.

BayWa AG shares have also advanced. The operator in the agriculture, building materials and energy sectors reported that its fiscal 2020 preliminary earnings before interest and tax or EBIT increased 14.3 percent to 215.3 million euros from 188.4 million euros last year.

U.S. Economic Reports

New York Federal Reserve President John Williams is due to give opening and closing remarks before New York Fed Webinar Series on Culture/Session 3: Diversity, Equity & Inclusion at 9 am ET.

At 9:05 am ET, Federal Reserve Governor Lael Brainard is scheduled to speak on "Financial Stability" before a virtual Institute of International Bankers 2021 Annual Washington Conference.

The Institute for Supply Management is scheduled to release its report on manufacturing activity in the month of February at 10 am ET.

The ISM’s manufacturing PMI is expected to inch up to 58.8 in February from 58.7 in January, with a reading above 50 indicating growth in the manufacturing sector.

Also at 10 am ET, the Commerce Department is scheduled to release its report on construction spending in the month of January. Construction spending is expected to increase by 0.8 percent.

Atlanta Federal Reserve President Raphael Bostic is due to give opening remarks before a virtual “Racism and the Economy: Focus on Housing” webinar presented by the twelve Federal Reserve district banks at 2 pm ET.