US futures rise as investors look for bargains in tech stocks

US futures were higher on Thursday as investors looked to snap up some bargains in tech stocks, looking past a surge in coronavirus cases in China.

Optimism for US markets soothed investors’ fears earlier in the day in Europe over the impact on the global economy of a surge in coronavirus cases in China, just as the country eases its tough pandemic policies. Crude oil and commodities-related stocks remained weak.

Contracts tracking the US benchmark S&P 500 were trading up 0.5 per cent and the Nasdaq 100 0.6 per cent as investors bought tech stocks such as Tesla and Apple in pre-market trading.

Shares in Tesla have dropped 40 per cent this month on fears that the electric car maker’s chief executive Elon Musk was distracted by his purchase of Twitter. Apple has fallen 12 per cent as investors fret about disruptions to its manufacturing operations in China.

Bespoke Investment Group, a research group, pointed out that the tech-heavy Nasdaq was down 10.9 per cent month-to-date. “If the declines for the Nasdaq hold, this will be its worst December on record since 1971,” it said. “Tax-loss selling, and no buyers in sight, is likely playing a part in this recent weakness, and that pressure will end when the calendar turns.”

In thin trading in Europe, the benchmark Stoxx 600 recouped a 0.4 per cent drop to trade flat. The commodities-heavy FTSE 100 fell 0.2 per cent, led by declines for BP, down 0.3 per cent.

In commodities markets Brent crude, the international oil benchmark, recovered from its earlier lows but remained 1.2 per cent lower while WTI, the US counterpart, was down 1.6 per cent.

Hong Kong’s Hang Seng index closed down 0.8 per cent, while China’s blue-chip CSI 300 index fell 0.4 per cent as major cities across China were faced with a surge in Covid-19 cases.

Thursday’s declines come after China’s National Health Commission said it would drop quarantine requirements for inbound passengers from January 8, even as the country endures its worst Covid outbreak. The announcement was the latest easing of the government’s punishing zero-Covid policies, which have hit economic growth.

A growing number of countries, including the US and Italy, have announced that they will require negative Covid tests for air passengers travelling from China.

Hong Kong also further eased its pandemic restrictions on Wednesday, scrapping PCR tests upon arrival to the Asian financial hub, as well as limits on dining in restaurants.

The Hang Seng Tech index was down 2.5 per cent after the Nasdaq Golden Dragon index, which tracks Chinese tech groups trading in the US, closed on Thursday down more than 3.8 per cent.

The yield on the 10-year US government bond fell 0.01 percentage points to 3.87 per cent. Yields fall when prices rise.