U.S. stock futures edged up on Monday, as investors awaited a busy week of corporate earnings, economic data and central-bank decisions. Futures tied to the S&P 500 added 0.1% after the benchmark stocks gauge posted its biggest one-week loss since late October. U.S. stock and bond markets are closed Monday for Martin Luther King Day.
Stocks have wobbled in recent days after a strong start to the year fueled by hopes of a vaccine-induced economic recovery that could be aided by further fiscal stimulus under the incoming administration. Though many investors expect the rally to continue, they say stocks are likely to remain bumpy in the coming weeks amid signs that high coronavirus case rates are hurting economic activity.
“The markets are in a way front-running the recovery and the normalization of economic activity,” said Agnès Belaisch, chief European strategist at the Barings Investment Institute. Stocks are bound to pause intermittently given the disconnect between the market and the way Covid-19 restrictions are crimping the economic recovery, she said.
Investors this week will parse quarterly earnings from dozens of big companies, including J.B. Hunt Transport Services, UnitedHealth Group and Intel, for guidance about the outlook for profits and revenue over the course of 2021. Monetary-policy decisions by the European Central Bank and Bank of Japan are also on tap, as well as surveys that will give an indication of business activity at the start of the year and President-elect Joe Biden’s inaugura-tion. In overseas markets, the pan-continental Stoxx Europe 600 edged up 0.2%.
Shares of Carrefour slid 6.9% after the French grocer and Canadian convenience-store operator Alimenta-tion Couche-Tard called off takeover talks. The decision came after the French government shot down Couche-Tard’s offer to buy Carrefour, saying it threatened jobs and food security.
“The market is focusing back on some of the negatives,” said Em-manuel Cau, head of European equity strategy at Barclays. Executives will be cautious in offering guidance for the rest of the year given the degree of uncertainty and the wide-ranging restrictions still in place to control coronavirus, he said.
Among other individual stocks, Stellantis rose 6% as the auto maker, newly formed from the merger of Fiat Chrysler Automobiles and PSA Group, made its trading debut. Thyssenkrupp rose 7% after the German industrial conglomerate said it had been awarded a contract to build an electrolysis plant in Canada and Bloomberg reported that it was considering listing its steel division on the stock market.
Airline stocks including Ryanair and Deutsche Lufthansa slipped, indicating nervousness among investors about the speed at which the travel sector will reopen. The U.K. on Monday imposed new rules requiring people arriving from abroad to self-isolate.
“If we’re not getting a sense of a return to normality any time soon then clearly a lot of those kind of reflation trades that everyone got on board with late last year will come under a bit of pressure,” said Charles Hepworth, an investment director at Swiss asset manager GAM.