Stock index futures pushed higher Monday on news that China intends to end its currency’s fixed rate to the dollar, a move investors believe will boost Chinese demand for exports as well as commodities.
On Monday, China's yuan surged to a 21-month high on expectations that China will loosen its peg, soothing political tensions with the West and encouraging investors to snap up riskier assets.
The peg made China the target of criticism since China’s decision to lock in 2008, as the international community felt Beijing has enjoyed an unfair trade advantage during the global credit crunch.
Asian currencies and stocks rose, U.S. Treasurys fell, and the yuan spot climbed as high as 6.8015 against the dollar, or up 0.38 percent, its strongest level since being revalued nearly five years ago.
On Tuesday, UK Chancellor of the Exchequer George Osborne will announce how he intends to tackle his country’s bourgeoning budget deficit. Proposed revenue-enhancers include a bank levy, reforming welfare benefits and public sector pay, payroll tax breaks for new businesses, and a review of public sector pensions.
Meanwhile, Saudi Arabia is holding more than double the amount of gold as previously thought, according to new estimates that illustrate to the resurgence of the precious metal as part of emerging economies' reserves. The discovery could fuel the rally in the price of gold, which hit a nominal record high above $1,260 an ounce on Friday.
The worst-case scenario rate of oil leakage from BP’s ruptured well is approximately 100,000 barrels per day, according to an internal company document – far higher than the US government’s estimate of 60,000 barrels per day.
BP spokesman Toby Odone said the document was genuine but the worst-case scenario applied only to a situation in which a key piece of equipment called a blowout preventer is removed, so the 100,000 number is irrelevant.
The oil giant also said the cost of its response to the spill had hit $2 billion and that it had paid out $105 million in damages to those affected by the disaster.
BP shares fell 4 percent in premarket trading.
Monday’s economic data calendar includes May’s existing home sales, with the consensus forecasting a rise to an annual rate of 6.1 million homes, up from a rate of 5.77 million in April, according to economists surveyed by Briefing.com.
The rate of home sales jumped by 410,000 in April, which was the final month first-time and existing home buyers could take advantage of the government’s tax break.
The earnings calendar is light, with the latest financial results from Sonic and Steelcase expected after the close.
Walt Disney shares may rise later today, as the company’s “Toy Story 3” opened with a record $109 million in ticket sales, according to Hollywood.com Box Office.