US Stock Future Rise Optimistic About Chinese Stimulus

U.S. stock index futures edged higher on Monday as a weak reading on Chinese manufacturing raised hopes that the Chinese government would issue new stimulus to combat slowing momentum, though ongoing tensions in Ukraine weighed on sentiment.

* Recent momentum on Wall Street has been to the upside, with the S&P 500 .SPX hitting an intraday record on Friday, though it subsequently ended the day lower. Equities have been lifted by some positive domestic data, and a belief that the biggest East-West conflict since the Cold War won’t escalate.

* Concerns about the region continued on Monday as Russian troops seized a Ukrainian marine base in Crimea, the latest in a confrontation that has prompted the United States and European Union to respond with personal sanctions against some of Russian President Vladimir Putin’s political and business allies.

* While few U.S. companies have excessive exposure to the region, investors are concerned about the potential economic fallout of any further escalation in tensions.

* China’s manufacturing engine contracted in the first quarter of 2014, according to the flash Markit/HSBC Purchasing Managers’ Index. The report came in below expectations but raised hopes for new stimulative measures.

* Accommodative monetary policies from the U.S. Federal Reserve have fueled market gains for months, though the central bank has gradually been withdrawing stimulus. Last week, concerns mounted after Fed Chair Janet Yellen raised the possibility of an earlier-than-expected increase in interest rates.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza