Stocks Pause After Rally, Seek Rate-Cut Signals: Markets Wrap

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(Bloomberg) — European shares paused around a record high after six weeks of gains, as investors waited for reassurance that central banks are on track to cut interest rates in the coming months.

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The pan-European Stoxx 600 gauge rose 0.1%, although the tech shares subindex outperformed, tracking Friday’s Wall Street gains. Futures for the Nasdaq 100 ticked slightly higher, hinting that megacap tech shares such as Nvidia Corp. could advance further. Treasuries slipped, while oil prices steadied near the highest level this year after OPEC+ extended production cuts.

The S&P 500 index has now gained for 16 of the last 18 weeks, a run not seen since 1971, Deutsche Bank AG analysts pointed out. That rally was fanned further last week by US data that reinforced bets the Federal Reserve would be able to cut rates later this year. The earnings season, meanwhile, showed companies averaging 8% earnings growth.

“Better economic outlook, bullish investor sentiment and some better earnings have supported the equity markets,” Jefferies strategist Mohit Kumar wrote in a note. “Whether it’s the economic outlook or the central bank ‘put’ being back on the table, investors are very positive on risky assets.”

While markets have broadly pushed Fed policy-easing expectations to July, from the previously anticipated May, Kumar still expects 75-100 basis points worth of rate cuts this year.

Some hints could come this week from Fed Chair Jerome Powell’s congressional testimony, while the European Central Bank will hold a policy meeting on Thursday. A raft of economic data is also due, including US monthly payrolls figures on Friday.

In US premarket trading, chipmakers continued their ascent, with Western Digital Corp., Micron Technology Inc. and Nvidia rising between 1% and 3.5%. Tesla Inc dropped 1.7%.

In Europe, Delivery Hero SE rose after announcing the launch of a financing transaction to amend and extend its financing facilities. Earlier in Asia, the world’s top chipmaker, Taiwan Semiconductor Manufacturing Co., rose to its highest-ever level.

Elsewhere, Bitcoin topped $65,000, leading traders to bet the cryptocurrency will surpass the record price of almost $69,000, hit during the pandemic.

Key events this week:

  • ECB Governing Council member Robert Holzmann speaks, Monday

  • Fed’s Patrick Harker spoke Monday

  • Japan’s Tokyo CPI, Tuesday

  • BOJ Governor Kazuo Ueda speaks, Tuesday

  • China Caixin services PMI, Tuesday

  • China kicks off its 14th National People’s Congress, Tuesday

  • Eurozone S&P Global Services PMI, PPI, Tuesday

  • US factory orders, ISM services, S&P Global Services PMI, Tuesday

  • More than a dozen US states hold Republican and Democratic primaries, Tuesday

  • Australia GDP, Wednesday

  • UK Chancellor Jeremy Hunt unveils annual budget, Wednesday

  • Eurozone retail sales, Wednesday

  • Fed Chair Jerome Powell tests before House committee, Wednesday

  • Fed issues Beige Book survey of regional economic conditions, Wednesday

  • Fed’s Neel Kashkari, Mary Daly speak, Wednesday

  • China trade, forex reserves, Thursday

  • BOJ board member Junko Nakagawa speaks, Thursday

  • ECB rate decision, Thursday

  • US initial jobless claims, trade, Thursday

  • Fed Chair Jerome Powell tests before Senate committee, Thursday

  • Fed’s Loretta Mester speaks, Thursday

  • US President Joe Biden delivers the State of the Union address, Thursday

  • Eurozone GDP, Friday

  • US nonfarm payrolls, unemployment, Friday

  • Fed’s John Williams speaks Friday

Some of the main moves in markets:

Stocks

  • The Stoxx Europe 600 rose 0.1% as of 9:44 am London time

  • S&P 500 futures were little changed

  • Nasdaq 100 futures were little changed

  • Futures on the Dow Jones Industrial Average fell 0.2%

  • The MSCI Asia Pacific Index rose 0.4%

  • The MSCI Emerging Markets Index rose 0.7%

Currencies

  • The Bloomberg Dollar Spot Index was little changed

  • The euro rose 0.1% to $1.0849

  • The Japanese yen was little changed at 150.22 per dollar

  • The offshore yuan was little changed at 7.2109 per dollar

  • The British pound rose 0.2% to $1.2675

Cryptocurrencies

  • Bitcoin rose 4% to $65,365.1

  • Ether rose 1.6% to $3,533.1

Bonds

  • The yield on 10-year Treasuries advanced two basis points to 4.20%

  • Germany’s 10-year yield declined three basis points to 2.39%

  • Britain’s 10-year yield declined two basis points to 4.09%

Commodities

  • Brent crude was little changed

  • Spot gold rose 0.1% to $2,085.85 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Aya Wagatsuma, Winnie Hsu and Tassia Sipahutar.

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