S&P 500 Futures portray rejection of reflation fears with mild gains

S&P 500 Futures gain 0.15% intraday, the most in a week.
Fed policymakers, recently US data tame bond bears.
Return of China, Japan after three-day off could magnify risk-on mood in Asia.
Pre-BOE, NFP sentiment and covid woes can test momentum traders.

Anil Panchal FXStreet

S&P 500 Futures pick up bids around 4,165, up 0.15% on a day, during early Thursday. In doing so, the risk barometer follows its Wall Street benchmark that previously cheered receding odds of reflation and dialing back of the Fed’s easy-money policies.

Be it Fed Governor Michelle Bowman or Boston Federal Reserve President Eric Rosengren, not to forget Fed Vice Chair Richard Clarida, all of them rejected challenges to the US central bank’s monetary policy status. The reflation risk gained momentum during late Tuesday on US Treasury Secretary Janet Yellen’s comments before the ex-Fed Chair reversed her moves and signaled not supporting the rate hikes.

Elsewhere, the coronavirus (COVID-19) woes are escalating in Japan, Canada and India while vaccinations are rising in the West. It should be noted that Australia marked a fresh covid case in the New South Wales (NSW) and recalled some activity restrictions.

Above all, the return of traders from China and Japan for the first time since Friday magnifies the risk-on mood as traders may have emphasized the immediate catalysts.

However, the Group of Seven nations (G7) criticize China’s role in global politics and trade, which in turn could push Beijing towards harsh retaliation as the key diplomats join the work. Also, Japan is under pressure to extend the state of emergency in four prefectures beyond the May 11 deadline amid escalating virus woes in the Asian major.

Looking forward, the Bank of England (BOE) could entertain momentum traders with its quarterly inflation report as expectations are high. Also important is the weekly jobless claims data from the US. It’s worth noting that the key is Friday’s US jobs report as recent weakness in US data, not much though, should back the bond bears on any disappointment from the monthly employment figures.

Read: Wall Street Close: Dow refresh record top, Nasdaq prints five-day downtrend on mixed clues

Author

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

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