Monday Stocks Forecast: US & Asia

US stock futures dipped and Asian stocks opened with modest gains as investors weighed further signs of positive developments in the global fight against the coronavirus. The yen was steady as traders awaited a key Bank of Japan policy meeting.

Equity benchmarks in Japan and South Korea ticked higher after US stocks ended firmer on Friday. Australia’s S&P/ASX 200 was little changed, but still up by 1.5%. The Australian dollar outperformed, while moves were muted elsewhere across foreign-exchange markets. Coronavirus deaths slowed the most in more than a month in Spain, Italy and France while fatalities reported in the UK and New York were the lowest since the end of March. Oil dipped.

The Federal Reserve joins the BOJ and the European Central Bank announcing policy decisions this week as the battle against the pandemic continues with some countries proceeding on steps to relax lockdown measures. Several major economies will release GDP numbers while corporate earnings will keep flooding in, including from Amazon.com Inc., Barclays Plc and Samsung Electronics Co.

The US stock market has been growing lately amid the news of the adoption by the Senate of a law on the allocation of additional state support for $484 billion. The growth of risk assets was also supported by expectations of a gradual resumption of economic activity. Two US States have already announced the partial lifting of the quarantine, and several more States are in line. Decisions on easing restrictions have also been made in several European countries.

US stock index futures slipped late Sunday ahead of likely ugly earnings reports this week from some of America's biggest companies. Dow Jones Industrial Average futures (YM00) was rising modestly on Monday morning by 152 points or 0.6% while S&P 500 futures (ES00) scored 0.5% and Nasdaq-100 futures (NQ00) edged 0.9% . US oil futures (CLM20) are retreating by almost 14%.

This coming week is the busiest of last quarter's corporate earnings report season with Alphabet (GOOGL) -  +0.43% at Friday’s close, Amazon (AMZN) - +0.44%, Apple (AAPL) - +2.88%, Intel (INTC) - +0.37% and Tesla (TSLA) - +2.76% set to release their reports along with major Dow components such as Boeing (BA) that ended last week with -6.36% and Exxon Mobile (XOM) shares rising by 0.64%. Stock indexes fell last week overall, snapping a two-week streak of gains, as investors weighed economic data, mixed corporate earnings and the latest coronavirus-related economic aid package from the US Congress.

Singapore shares opened higher on Monday: STI up 1.13%, The Straits Times Index increased by 1.17%. Elsewhere in Asia, Tokyo stocks also opened higher on Monday. The benchmark Nikkei 225 index was up 2.71% or 521.22 points at 19,783.22 while the broader TOPIX 1000 index edged up 1.84% to 1,364.48.

Historically, the stock market has some of its best returns when conditions are shifting from awful to less bad. The recent rally in energy stocks in the face of record-low washout prices in crude oil is an illustration of that. Volatility in the oil market could continue for the next two months but may ease by the summer as production cuts by OPEC+ take hold and some economic activity resumes. Prices could then push back up to the $30-to-$40-per-barrel range, but they won't return to pre-crisis levels any time soon. Things might soon line up for investors to start making a more aggressive bet the worst will pass before long and the real economy can start the healing process. And perhaps that bet will prove premature for a while once it’s laid.