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Stock futures wavered Monday, and Tesla shares fell in premarket trading after Chief Executive Elon Musk asked Twitter users if he should sell some of his stock.

A strong earnings season has helped push stocks to new highs. About 82% of S&P 500 companies that have reported results this season have topped analysts’ earnings forecasts, according to FactSet data.

The spate of earnings have helped offset concerns that higher-than-anticipated inflation could hurt corporate profits.

“It’s been a really good earnings season so markets continue to power ahead driven by earnings growth,” said Altaf Kassam, head of investment strategy for State Street Global Advisors in Europe. “What we’re seeing is companies do have the pricing power they need and consumers are spending some of the cash they’ve saved up over the pandemic.”

Companies including Roblox, PayPal Holdings and retail trader favorite AMC Entertainment Holdings are set to report earnings after the closing bell.

In premarket trading, Tesla shares declined 6.7% after Twitter users said Mr. Musk should sell 10% of his Tesla stock, after the chief executive polled them and pledged to abide by the outcome of the vote. The stake could amount to around $21 billion, based on the stock’s Friday closing price.

Overseas, the pan-continental Stoxx Europe 600 edged 0.1% lower. Shares of Abrdn rose 2.2% after the Scottish fund manager said it was in talks to acquire online broker Interactive Investor.

Forex:

The potential appointment of Federal Reserve Governor Lael Brainard as the central bank’s chair poses the main “downside risk” to the dollar in the near-term, MUFG Bank said.

“Market participants would expect the Fed to be even more cautious about tightening policy under her leadership,” MUFG currency analyst Lee Hardman said.

President Joe Biden reportedly met with Fed Chair Jerome Powell and Brainard separately on Thursday as he considers who will lead the central bank next year.

Bitcoin jumped on expectations that the era of cheap money will remain for longer and inflation will continue to accelerate, said Hargreaves Lansdown analyst Susannah Streeter.

“The recent surge in the crypto asset partly seems to have been caused by investors piling in, seeing it as a hedge against inflation.” Some investors seem enticed by the view that huge monetary stimulus programs are fuelling inflation, which lowers the value of money over time, whereas bitcoin has a fixed limit on the number of coins that can be created, Streeter said.

However, investing in bitcoin is “highly risky” given how volatile it is, she said. Bitcoin rises 8.7% to $66,715 after earlier hitting a two-and-a-half-week high of $66,955, according to FactSet.

Sterling fell on concerns about rising tensions between the U.K. and EU over the protocol agreed as part of the Brexit deal to prevent a hard border between Northern Ireland and Ireland.”This issue has been bubbling since the summer but has failed to hit GBP too severely,” ING analysts said. “And we suspect that GBP can hold up ok, assuming that the prospect of a Bank of England rate hike in December remains live.”EUR/GBP is unlikely to rise above 0.8600 and should end the year around 0.8500, the analysts said.Bonds:In bond markets, the yield on the benchmark 10-year Treasury note ticked up to 1.486% Monday from 1.451% Friday.The current rise in inflation is temporary, said Carmignac, adding that deflationary factors are still in place. The rebound of the global economy after the pandemic crisis has fuelled price increases due to supply bottlenecks, including in labor, but “the fact that the end of these bottlenecks is foreseeable argues for inflation being only temporary,” said Frederic Leroux, member of Carmignac’s strategic investment committee.An ageing population and unprecedented debt levels in the global economy in the post-war period are among the factors which suggest that the current inflation is temporary. Assuming inflation will be permanent is “still like a bet with little chance of success,” he says, but added that central banks should also pay attention to this risk.European government bond markets look set to move into calmer waters this week, said Commerzbank. “The sharp countermoves in yields, curves and spreads amid waning rate hike expectations face a reality check also given the light agenda over the next few days,” said Commerzbank’s rates strategist Rainer Guntermann.The 10-year German Bund yield might test the zero mark, but a sustained rise significantly above that is unlikely, said LBBW. “Growing speculation about lasting reflation and an earlier rate hike by the ECB are shaping the trends in the euro bond market,” LBBW said.The 10-year Bund yield hit […]

source North American Morning Briefing: Stock Futures Pause; Tesla Shares Fall Premarket

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