(Bloomberg) — European stocks rose, tracking a record S&P 500 close, on optimism about US interest-rate cuts after Federal Reserve Chair Jerome Powell said inflation is getting back on a downward path.
Most Read from Bloomberg
Much of the spotlight continues to be on politics, on the eve of elections in the UK. In France, the benchmark CAC 40 index rose as anti-National Rally parties attempt to prevent Marine Le Pen’s far-right group from achieving an absolute majority in the final round of legislative voting on Sunday. Europe’s regional Stoxx 600 index advanced 0.4%, led by miners and technology stocks.
US equity futures were steady ahead of a session that will be shortened because of the July 4 holiday. The S&P 500 (^GSPC) closed above 5,500 for the first time on Tuesday, its 32nd record this year. The Nasdaq 100 (NQ=F) also set an all-time high with its first close above 20,000.
Stocks in the US keep defying doomsayers amid solid corporate earnings, AI mania and expectations that interest rates will drop, adding more than $16 trillion to the S&P 500’s value from a closing low on October 2022. A lack of any meaningful pullback has given bulls conviction that the rally is sustainable.
The new record high close in the S&P 500 and Nasdaq “could also be taken as another win given the psychological significance that ‘round numbers’ hold,” said Chris Weston, head of research at Pepperstone Group in Melbourne.
Investors are looking to US initial jobless claims and ADP employment data due Wednesday to gain more clues on the policy outlook. Fed Chair Powell acknowledged the central bank has made “quite a bit of progress” in reducing inflation but emphasized officials need more evidence before lowering interest rates. The dollar and Treasuries were little changed.
Markets are also gearing up for the all-important US payrolls reading due Friday. Economists expect the report to show employers added about 190,000 workers in June and the unemployment rate likely held at 4%.
In Europe, recent political turmoil as the French snap election jolted markets was accompanied by hedge funds selling the region’s equities. The move was driven by both long positions being unwound and short positions being added in roughly equal amounts, according to Goldman Sachs Group Inc.’s prime brokerage desk.
Europe suffered the biggest reduction in overweight positions among regions globally in June, reversing the buying trend seen in May, Goldman said. Funds cut the most exposure to financial stocks, particularly banks, with net selling for that sector the largest since November 2021.
Elsewhere Wednesday, Asian stocks headed for their longest stretch of gains since May. Japanese equities rose, with the benchmarks now less than 1% from their record highs. In China, services activity expanded at the slowest pace in eight months in June, a private gauge showed, a slowdown that may add to worries over the economy’s outlook. Stocks in Hong Kong gained, while those on the mainland fell.
Oil climbed to near a two-month high on signs of a significant drawdown in US crude stockpiles. The American Petroleum Institute reported crude inventories shrank 9.2 million barrels last week, according to people familiar with the data. If confirmed in official figures later Wednesday, that would be the largest drop in barrel terms since January.
Key events this week:
-
Eurozone S&P Global Eurozone Services PMI, PPI, Wednesday
-
US Fed minutes, ADP employment, ISM Services, factory orders, initial jobless claims, durable goods, Wednesday
-
Fed’s John Williams speaks, Wednesday
-
UK general election, Thursday
-
US Independence Day holiday, Thursday
-
Eurozone retail sales, Friday
-
US jobs report, Friday
-
Fed’s John Williams speaks, Friday
Some of the main moves in markets:
Stocks
-
The Stoxx Europe 600 rose 0.4% as of 9:20 a.m. London time
-
S&P 500 futures were little changed
-
Nasdaq 100 futures were little changed
-
Futures on the Dow Jones Industrial Average were little changed
-
The MSCI Asia Pacific Index rose 0.7%
-
The MSCI Emerging Markets Index rose 0.8%
Currencies
-
The Bloomberg Dollar Spot Index was little changed
-
The euro rose 0.1% to $1.0761
-
The Japanese yen fell 0.2% to 161.81 per dollar
-
The offshore yuan was little changed at 7.3087 per dollar
-
The British pound was little changed at $1.2695
Cryptocurrencies
-
Bitcoin fell 1.8% to $60,832.7
-
Ether fell 2% to $3,347.59
Bonds
-
The yield on 10-year Treasuries was little changed at 4.43%
-
Germany’s 10-year yield advanced three basis points to 2.63%
-
Britain’s 10-year yield was little changed at 4.24%
Commodities
-
Brent crude rose 0.3% to $86.50 a barrel
-
Spot gold rose 0.7% to $2,346.48 an ounce
This story was produced with the assistance of Bloomberg Automation.
—With assistance from Rob Verdonck and Sagarika Jaisinghani.
Most Read from Bloomberg Businessweek
©2024 Bloomberg L.P.
Source link
