(Bloomberg) — European stocks rose ahead of a widely expected interest rate cut by the European Central Bank, as markets reassessed the challenges of policy easing this year.
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Tech stocks led gains in the Stoxx 600 index after the sector hit a new all-time high on Wall Street on Wednesday. U.S. stock futures are steady after the S&P 500 hits its 25th record this year. Nvidia Corp., a big beneficiary of artificial intelligence investment, became the first computer-chip company to hit $3 trillion in market capitalization.
« Behind a lot of the optimism you see in the markets, technology still continues to lead the pack, » said Matt Stuckey, senior portfolio manager at Northwest Mutual Wealth Management. « If you look at revenue revisions to see what's working and what's not, technology is leading the way. »
Attention turns to the ECB as traders look for guidance on the path forward for monetary policy, particularly from President Christine Lagarde at a press conference. Views on further rate cuts this year have turned more cautious against a backdrop of data showing stronger-than-expected economic growth, inflation and wage growth.
As investors await Friday's U.S. jobs report, a private payrolls reading on Wednesday showed that corporate hiring grew at its slowest pace since the start of the year. Meanwhile, the services sector expanded the most in nine months, driven by the biggest monthly gain in a measure of business activity since 2021.
The Bloomberg index of global government bonds rose for a fifth session on Wednesday, its best performance since December, as traders increased rate cut bets. The dollar retreated as policymakers in Canada cut borrowing costs on Wednesday, which focused attention on the path of U.S. rates.
« There's still a little bit of optimism around the Fed's ability to cut rates later this year, » said Northwestern Mutual's Stuckey. « With the Bank of Canada cutting rates and expectations that the ECB will do so, the pace of a coordinated global easing cycle is starting to gain some traction. »
Treasury yields were higher after falling in the previous session, with markets almost fully pricing in two Federal Reserve rate cuts in 2024.
In Asia, stocks rose for the first time in three days, with Indian shares extending gains after Prime Minister Narendra Modi won crucial support from two key allies in his coalition.
In Japan, the yen pared earlier gains after Bank of Japan policy board member Toyogi Nakamura said it was appropriate to keep current policy for now. The Japanese currency bounced back from an overnight sell-off after a volatile week thanks to its role in emerging market carry trades.
Elsewhere, China's property stocks were on track to enter a tech bear market as doubts loomed over Beijing's efforts to improve the sector. The Bloomberg Intelligence benchmark extended losses in the nation's developer stocks to 20% since mid-May.
In commodities, oil rose for a second session as Saudi Arabia signaled concerns about the demand outlook with cuts in its crude prices. Copper led industrial metals prices, rising 1.5%, while zinc and nickel added more than 1%.
Highlights of this week:
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Eurozone retail sales, ECB rate decision, Thursday
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US Initial Jobless Claims, Trade, Thursday
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China trade, forex balance, silver
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Eurozone GDP, Friday
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US unemployment rate, non-farm payrolls, Friday
Some key movements in the markets:
Shares
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The Stoxx Europe 600 was up 0.6% as of 8:30 a.m. London time.
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S&P 500 futures were little changed
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Nasdaq 100 futures rose 0.1%
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The future of the Dow Jones Industrial Average was little changed
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The MSCI Asia Pacific index rose 0.8%
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The MSCI emerging market index rose 0.9%
Coins
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The Bloomberg Dollar Spot Index was little changed
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The euro was up 0.1% at $1.0881
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The Japanese yen was little changed at 156.17 per dollar
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The offshore yuan was little changed at 7.2609 per dollar
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The British pound was little changed at $1.2794
Cryptocurrencies
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Bitcoin fell 0.5% to $70,894.4
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Ether fell 0.6% to $3,841.85
Bonds
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The yield on 10-year Treasuries rose two basis points to 4.30%.
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Germany's 10-year yield was little changed at 2.52%
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Britain's 10-year yield rose one basis point to 4.19%
materials
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Brent crude was up 0.6% at $78.89 a barrel
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Spot gold rose 0.4% to $2,365.63 an ounce
This story was produced with the help of Bloomberg Automation.
– with assistance from Matthew Burgess and Toby Alter.
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