By Geoffrey Smith
Investing.com -- The U.S. will have enough vaccines for all adults by May, while Texas is ending restrictions on business and lifting its mask mandate. ADP releases its private payrolls reports for February, stocks are set to bounce from their losses on Tuesday, and the European Central Bank has changed its mind about stopping the rise in bond yields. Oil prices are buoyant again before the OPEC+ meeting, and US inventory data are due later. Here's what you need to know in financial markets on Wednesday, March 3rd.
1. Vaccines aplenty; Texas lifts mask mandate
The U.S. economy is on track to reopen faster than initially thought, after a deal between Johnson & Johnson (NYSE:JNJ) and Merck (NYSE:MRK) that will substantially expand manufacturing capacity for J&J’s newly-approved, single-shot vaccine against Covid-19.
President Joe Biden said the deal should ensure that all American adults have the chance to be vaccinated by the end of May, two months earlier than previously thought. That raises the prospect of an earlier and fuller reopening of the tourism and hospitality sectors in particular.
In a separate, but related, development, Texas became the biggest state yet to lift its mandate on wearing masks and end Covid-related restrictions on business. The move reflects not only a sharp drop in infections and hospitalizations in recent weeks, but also a need for Governor Greg Abbott to change the local political narrative after last month’s disaster with energy supplies during the cold snap.
2. Australia gives a foretaste of life after the pandemic
Australia gave the northern hemisphere a foretaste of what can be expected as and when economies reopen for the summer.
The ‘Lucky Country’ reported GDP growth of 3.1% in the final quarter of last year, well above expectations for 2.5%, due largely to consumers spending the excess savings they had accumulated over previous quarters. Many policy-makers, including Bank of England Governor Andrew Bailey, have forecast a sharp rise in spending on services in particular as lockdowns lift.
The near-term reality remains more troubling, however. Italy announced plans to tighten restrictions on business and social life in some regions after a rise in cases, and Poland reported its new infections had doubled since it relaxed its regulations. Germany is due to announce a modest relaxation in its Covid rules later this week. The final PMIs for the Eurozone, meanwhile, showed overall activity still contracting in February, albeit at a slower pace.
3. Stocks set to bounce; Dollar Tree, Marvell earnings due; ISM services survey eyed
U.S. stock markets are set to open markedly higher again in response to brighter prospects for economic reopening, after renewed jitters triggered heavy selling of technology stocks in particular on Tuesday.
By 6:30 AM ET (1130 GMT), Dow Jones Futures were up 215 points, or 0.7%, while S&P 500 futures were up 0.6% and Nasdaq 100 futures were also up 0.7%.
With earnings season winding down – Brown Forman (NYSE:BFb), Marvell (NASDAQ:MRVL) and Dollar Tree (NASDAQ:DLTR) are the only reports of note early - attention is likely to be on the ADP private payrolls report for February, due at 8:15 AM ET. The ISM non-manufacturing survey follows at 10 AM.
4. ECB relaxed about rising bond yields
The European Central Bank is reportedly having second thoughts about needing to react to the recent rise in bond yields, according to Bloomberg.
The news agency reported sources close to the bank as saying that it doesn’t need to ramp up its bond buying, given that the recent sell-off reflects a justifiable improvement in sentiment about the economic outlook. Only last week, President Christine Lagarde had said that the ECB would be closely monitoring nominal bond yields, a message that many took as meaning it wasn’t prepared to let financial conditions tighten under any conditions.
Central banks have shown varying degrees of concern about the sell-off in bonds last week. Federal Reserve governor Lael Brainard said on Tuesday she found it ‘eye-catching’ but repeated that it will be ‘some time’ before the Fed changes its stance on bond purchases. The Reserve Bank of Australia, meanwhile, has intervened heavily over the last week to stop both three-year and 10-year bond yields rising.
5. Oil buoyant ahead of OPEC+ meeting; Inventory rise shrugged off
Crude oil prices rebounded overnight after a string of upbeat comments from key officials about the state of the global market ahead of the key ‘OPEC+’ meeting on Thursday, where Saudi Arabia, Russia and others will set output quotas for April.
Analysts warn that headlines of unchanged output at the OPEC level could mask an actual increase in supply from Saudi Arabia, which unilaterally cut its output by 1 million barrels a day for February and March.
By 6:45 AM ET, U.S. crude futures were up 1.8% at $60.84 a barrel, while Brent futures were up 1.8% at $63.84 a barrel, shrugging off a shock rise in U.S. inventories as reported by the American Petroleum Institute on Tuesday.
The government’s data are due at 10:30 AM ET as usual.