Europe Futures in Tight Range, China Rally Fizzles: Markets Wrap

(Bloomberg) — European stocks look set for a tepid start as traders await a European Central Bank monetary policy decision. A Chinese share rally fizzled after a press briefing on the property market failed to deliver major stimulus.

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Euro Stoxx 50 futures were little changed while US equity contracts fell in Asian trading. China’s CSI 300 erased a rally of as much as 1.3% after officials said the government will expand a program to support “white list” projects to 4 trillion yuan ($562 billion) from about 2.23 trillion yuan already deployed. The negative market reaction shows investors have set an increasingly high bar for stimulus optimism.

The ECB is forecast to lower interest rates for a second straight meeting Thursday after data showed slowing inflation is being accompanied by a worsening economy. Nestle SA, Nordea Bank Abp and Nokia Oyj are among companies that have announced earnings Thursday.

The challenge for China investors “right now is that we don’t have a big enough package to get people excited,” Jun Bei Liu, a fund manager at Tribeca Investment Partners, said on Bloomberg Television. “The Chinese economy is sitting at the bottom, but to reignite the growth, they really need to reignite confidence.”

Elsewhere in Asia, stock benchmarks declined in Japan and South Korea, and rose in Australia.

Taiwan Semiconductor Manufacturing Co. reported net income for the third quarter that beat the average analyst estimate. The data eased concerns over the chip sector after ASML Holding NV offered surprisingly dour order numbers and cut its 2025 revenue forecast earlier this week.

In European earnings, Nestle guided for a lower-than-expected organic revenue growth of 2% for the full-year, while Nordea Bank met estimate for its net interest income. Nokia Oyj sales failed to meet analysts’ estimates in the third quarter, as a recovery takes shape slower than previously expected.

Chinese data due Friday will show the world’s second-biggest economy expanded 4.5% in the third quarter from a year ago, according to economists surveyed by Bloomberg. That would mark its weakest pace in six quarters.

Chinese President Xi Jinping has called on government officials to make every effort to help the country meet its annual growth target of around 5%. However, after a series of press conferences this month in which policymakers offered no details of fresh stimulus, fears are now mounting that efforts may not be enough to revive growth.

China’s fading rally coupled with a selloff in technology companies is souring the outlook for Asian markets. The region’s MSCI equity index is still on course for its best year since 2020, but with traders expecting the Federal Reserve to set back interest-rate cuts and earnings slowing in markets such as India and Korea, risk sentiment needs fresh triggers to sustain momentum.

The Treasury 10-year yield climbed two basis points in Asian trade to 4.03%, and the Bloomberg dollar index was little changed. Australia’s dollar gained after the country’s unemployment rate was 4.1% in September, lower than the forecast of 4.2% in a Bloomberg survey.

Small Caps

Gains for US small-caps on Wednesday indicated investors are shifting out of the world’s largest tech companies that have soared on the back of the artificial intelligence boom and into other stocks that benefit in benign economic conditions.

“Investors may be looking to rotate away from large technology companies, which are widely owned and may have fewer clear catalysts going forward,” said David Russell at TradeStation. “With the election coming and the economy returning to balance, the long-awaited rotation away from megacaps to everything else could finally be at hand.”

Oil climbed, after four days of declines, as traders weighed potential risks to production from the Middle East against concerns over a global glut. Bitcoin fell after rising 1.7% Wednesday to touch the highest level since July.

Iron ore tumbled to a three-week low, a sign that investors doubt whether China’s latest moves to shore up the property market will do enough to boost construction activity and steel demand.

Key events this week:

ECB rate decision, Thursday
US retail sales, jobless claims, industrial production, Thursday
Fed’s Austan Goolsbee speaks, Thursday
China GDP, Friday
US housing starts, Friday
Fed’s Christopher Waller, Neel Kashkari speak, Friday

Some of the main moves in markets:

Stocks

S&P 500 futures fell 0.1% as of 2:49 p.m. Tokyo time
Nikkei 225 futures (OSE) fell 0.4%
Japan’s Topix was little changed
Hong Kong’s Hang Seng rose 0.3%
The Shanghai Composite was little changed
Euro Stoxx 50 futures were little changed

Currencies

The Bloomberg Dollar Spot Index was little changed
The euro was little changed at $1.0853
The Japanese yen was little changed at 149.50 per dollar
The offshore yuan was little changed at 7.1349 per dollar

Cryptocurrencies

Bitcoin fell 0.4% to $67,357.65
Ether rose 0.6% to $2,632.16

Bonds

The yield on 10-year Treasuries advanced two basis points to 4.03%
Japan’s 10-year yield advanced one basis point to 0.960%
Australia’s 10-year yield advanced four basis points to 4.25%

Commodities

West Texas Intermediate crude rose 0.3% to $70.58 a barrel
Spot gold rose 0.3% to $2,683.04 an ounce

This story was produced with the assistance of Bloomberg Automation.