Stocks Rise With US Futures Ahead of Price Data: Markets Wrap

(Bloomberg) — European stocks rose, tracking gains in Asia, as investors awaited US price data that may provide guidance about the Federal Reserve’s policy path.

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The Stoxx Europe 600 climbed 0.3% at the open, led by financial services and banks. US equity-index futures advanced after a flat day on Wall Street. Asian stocks rose, recouping their losses from last week’s rout, bolstered by an advance in Japan.

The British pound gained after data showed UK unemployment unexpectedly fell in the second quarter, raising doubts about the pace of policy easing by the Bank of England. US Treasuries and the dollar were steady.

After last week’s turmoil, markets are focused on Wednesday’s US consumer price index to see if the Fed will have a freer or more constrained hand in to secure a soft landing for the economy. The recent rally in crude oil prices also puts the spotlight producer-price numbers later Tuesday, as an indicator of pipeline inflationary risks.

“The first wave of yen carry trade unwind should be complete by now, and investor focus is now on US inflation and retail sales data to gauge the soft-landing probability,” said Linda Lam, head of equity advisory North Asia at Union Bancaire Privee. “Risk sentiment is on the mend.”

Japan’s equities gained after a holiday, as a weaker yen was seen providing support for exporters. MSCI’s Asia-Pacific gauge rose as much as 1%. That erased losses from last week’s tumble, when a risk-off move sent indexes around the world plummeting and the VIX US volatility index above 65 at one point, compared with a lifetime average of around 19.5.

“The market’s reaction to last week’s VIX spike reflects a reassessment of positioning rather than just U.S. data points or yen carry unwinding,” said Billy Leung, an investment strategist at Global X Management in Sydney. “However, it’s key to be cautious in reading short-term Asia movements, given signs of foreign outflows and low liquidity.”

Brent crude remained near the $82 level it hit on Monday, as the US sees an Iranian attack against Israel as increasingly likely. Israel’s sovereign debt was cut by one notch by Fitch Ratings, which kept a negative outlook on the credit as continued military conflict weighs on the country’s public finances. Treasuries held Monday’s gains.

Elsewhere in Asia, regulators told commercial banks in China’s Jiangxi province not to settle their purchases of government bonds, taking some of the most extreme measures yet to cool a market rally that has alarmed Beijing.

The crackdown is beginning to take a toll on corporate debt markets, as the average yield for one-year corporate yuan bonds with AA ratings — typically considered junk debt in the onshore market — saw the largest jump since December 2022.

Key events this week:

Germany ZEW survey expectations, Tuesday
US PPI, Tuesday
Fed’s Raphael Bostic speaks, Tuesday
Eurozone GDP, industrial production, Wednesday
US CPI, Wednesday
China home prices, retail sales, industrial production, Thursday
US initial jobless claims, retail sales, industrial production, Thursday
Fed’s Alberto Musalem and Patrick Harker speak, Thursday
US housing starts, University of Michigan consumer sentiment, Friday
Fed’s Austan Goolsbee speaks, Friday

Some of the main moves in markets:

Stocks

The Stoxx Europe 600 rose 0.3% as of 8:18 a.m. London time
S&P 500 futures rose 0.5%
Nasdaq 100 futures rose 0.8%
Futures on the Dow Jones Industrial Average rose 0.3%
The MSCI Asia Pacific Index rose 1.1%
The MSCI Emerging Markets Index was little changed

Currencies

The Bloomberg Dollar Spot Index was little changed
The euro was little changed at $1.0929
The Japanese yen fell 0.5% to 147.90 per dollar
The offshore yuan was little changed at 7.1760 per dollar
The British pound rose 0.2% to $1.2800

Cryptocurrencies

Bitcoin rose 1% to $59,433.28
Ether fell 0.8% to $2,659.39

Bonds

The yield on 10-year Treasuries advanced one basis point to 3.91%
Germany’s 10-year yield was little changed at 2.23%
Britain’s 10-year yield advanced one basis point to 3.93%

Commodities

Brent crude fell 0.5% to $81.91 a barrel
Spot gold fell 0.4% to $2,462.42 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Jason Scott.