US futures edge higher after stellar start to February, while dollar climbs to 2-month high as economic outlook brightens

• US stocks were set to open slightly higher on Thursday, according to futures.
• The dollar was trading at around a 2-month high, while bond yields edged upwards.
• Upbeat jobs data on Wednesday has combined with stimulus plans to support sentiment.

US stocks were set to rise gently at the opening bell on Thursday morning, continuing their solid start to February, while the dollar strengthened on the back of signs that the economy is healing.

S&P 500 futures were 0.1% higher, Dow Jones futures were up 0.04% and Nasdaq futures had risen 0.32% by 5.20am ET.

The dollar index rose to its highest level since early December, while bond yields rose to close to their highest levels since March 2020 on the back of stronger growth expectations.

Asian stocks fell overnight as a rise in short-term borrowing costs in China knocked confidence. But European stocks eked out small gains in early trading.

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Global stocks have had a strong start to February, after they were rocked by a day-trading frenzy at the end of January that sent previously unloved shares such as GameStop soaring.

The S&P 500 rose just 0.1% on Wednesday, but that followed the best 2-day rally in nearly 3 months. Europe's Stoxx 600 was around 3% higher for the week on Thursday, while China's CSI 300 had climbed more than 2%.

Data released on Wednesday suggested the US economy could be recovering quicker than analysts predicted. The country's private sector added 174,000 jobs in January, according to the monthly ADP report, beating predictions of 70,000. Survey data also showed that the services sector was recovering well.

The data supported bond yields, which rise when investors anticipate growth and inflation. The yield on the 10-year US Treasury is nearing its highest since March 2020, and was up 0.3 basis points to 1.134% on Thursday.

The dollar index rose 0.28% to 91.41 on Thursday morning, its highest level since early December.

"A gentle rise in US bond yields was enough to sustain early US Dollar gains, with robust US data raising economic expansion expectations," said Jeffrey Halley, senior market analyst at currency firm Oanda.

A lower pound, as UK markets await the Bank of England's interest-rate decision, also helped the greenback. Sterling was down 0.43% to $1.359.

President Joe Biden's $1.9 trillion stimulus plan has also supported market confidence in recent weeks. Congressional Democrats are moving ahead with measures that could push the package through without Republican support.

Overnight in Asia, China's CSI 300 slipped 0.21% and Japan's Nikkei 225 fell 1.06%. Higher short-term borrowing rates in China have worried investors, causing concerns about credit supply.

In Europe, the Stoxx 600 index was 0.09% higher in early trading. The UK's FTSE 100 was down 0.07%, however.

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Former European Central Bank president Mario Draghi has accepted an invitation to form a government in Italy, after high-profile resignations created a political vacuum.

European markets have cheered Draghi's return, with Italy's FTSE MIB stock index up around 4% for the week.

David Madden, market analyst at trading platform CMC Markets, said: "His success at the helm of the ECB earned him the nickname 'Super Mario', but achieving similar results from strained Italian politics should prove to be much trickier."

Oil prices continued to rise to new one-year highs as investors bet on a strong economic recovery in 2021. Brent crude was up 0.02% to $58.70 a barrel, while WTI crude was 0.56% higher at $55.98 a barrel.