US pre-open: Futures point to gains after Powell strikes optimistic tone
US futures were pointing to solid gains ahead of the bell on Monday with stocks looking set to try and regain some of last week's losses after Fed head Jerome Powell said he was optimistic of the US economy's ability to bounce back from the Covid-19 pandemic.
As of 1240 BST, Dow futures were up 1.65%, while S&P 500 and Nasdaq-100 futures had the indices opening 1.61% and 1.32% firmer, respectively.
The Dow closed 60.08 points higher on Friday, however, this small gain wasn't enough to stop the blue-chip index from registering its worst week since that ended 3 April.
Monday's moves came after Federal Reserve chairman Jerome Powell told CBS that he was "highly confident" that the US economy would bounce back from the coronavirus-fuelled pullback after a vaccine has been developed.
Powell also said he believes the current downturn in the economy would not resemble the Great Depression, despite the possibility that US unemployment could peak at around 25%.
"I don't think that’s the likely outcome at all. We had a very healthy economy two months ago. Our financial system is strong," he said. "You have governments around the world, and central banks around the world, responding with great force and very quickly. And staying at it."
Gold also started off the week on a tear, adding more than 1% to last week's 2.4% advance to help the commodity breach the $1,760 level for the first time since October 2012.
Monday's surge was seemingly triggered by Powell's warning of potential asset price declines by if the Covid-19 pandemic was to take an "unexpected course".
IG's Joshua Mahony said: "Markets may be rising on the prospect of further Fed action, but the rise in gold highlights the continued expectation of economic decline and debt creation.
"Jerome Powell has reminded us that markets are likely to remain well supported irrespective of the outcome of the impending lockdown easing policies, with both Powell and Lagarde continuing to provide a ‘whatever it takes’ approach to dealing within this crisis. Interestingly, while central banks can help bolster equity prices, the unintended beneficiary of those actions remains gold, with the precious metal hitting the highest level since 2012. For the most part, this gold surge has been predictable. After all, if gold cannot outperform in an environment of rising debt, global central bank easing, and an impending recession, it would essentially be worthless as a haven asset."
Also in focus were plans to restart stalled economies both inside and outside the States, suggesting that some activity would begin to recover compared with the full lockdown seen in April.
In corporate news, Tesla shares were down in pre-market trading despite getting the green light to resume operations at its auto plant in California, while Uber shares were down ahead of the bell after food-delivery firm GrubHub revealed it had rejected a buyout offer from the ride-sharing giant.
On the macro front, the National Association of Housebuilders housing market index will be published at 1500 BST.