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Stocks Climb as Traders Revive Fed Easing Bets: Markets Wrap

In Business
May 06, 2024

(Bloomberg) — Stocks extended last week’s gains as traders focused on the prospect for the Federal Reserve to cut interest rates.

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S&P 500 futures and Europe’s Stoxx 600 added 0.2%, following similar gains in Asia. Trading volumes were lower than average with UK and Japanese markets shut for a holiday. German 10-year yields fell for a third day. Oil advanced after Saudi Arabia raised prices for grades to Asia.

“This week is expected to be calmer on the economic front: few economic data releases and limited central bankers’ intervention,” wrote Credit Agricole strategists led by Jean-Francois Paren.

Chinese shares led the rally in Asia as mainland markets played catchup following a holiday break. The CSI 300 Index jumped as much as 1.8%, while stocks in Hong Kong took a breather following a nine-day winning streak. Stocks also advanced in Australia, Taiwan and Singapore.

The yen weakened against the dollar, weighed down by Japan’s wide interest-rate spread with the US. Japanese financial markets are shut Monday for a holiday.

“We think the rally can sustain for a bit” in China, as valuations are still low and positioning from hedge funds and long-only funds remain near five year lows, Sunil Koul, Asia-Pacific equity strategist at Goldman Sachs Group Inc., said in an interview on Bloomberg Television. “There is still a very strong interest from people in the recent weeks to increase allocations to China.”

Global stocks have bounced back in recent days after falling last month when a string of stronger-than-expected data pushed back bets on US rate cuts.

While the US jobs data boosted optimism over potential easing, European policy makers appear likely to lower borrowing costs before their US counterparts.

European Central Bank Chief Economist Philip Lane said recent data have made him more certain that inflation is returning to the 2% goal, according to an interview with Spanish newspaper El Confidencial, raising the likelihood a first interest-rate cut in June. Central bankers including France’s Francois Villeroy De Galhau, Bundesbank President Joachim Nagel and Swiss National Bank President Thomas Jordan are due to speak at a Bank for International Settlements conference later Monday.

Some key events this week:

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

  • Australia rate decision, Tuesday

  • Eurozone retail sales, Tuesday

  • UBS earnings, Walt Disney, BP earnings, Tuesday

  • Minneapolis Fed President Neel Kashkari speaks, Tuesday

  • Brazil rate decision, Wednesday

  • Sweden rate decision, Wednesday

  • Toyota earnings, Wednesday

  • China trade, Thursday

  • Malaysia rate decision, Thursday

  • Mexico CPI, rate decision, Thursday

  • UK BOE rate decision, Thursday

  • Canada unemployment, Friday

  • UK industrial production, GDP, Friday

  • Chicago Fed President Austan Goolsbee speaks, Friday

Stocks

  • The Stoxx Europe 600 rose 0.2% as of 8:19 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 0.2%

  • The MSCI Emerging Markets Index rose 0.6%

Currencies

  • The Bloomberg Dollar Spot Index was little changed

  • The euro was little changed at $1.0767

  • The Japanese yen fell 0.5% to 153.76 per dollar

  • The offshore yuan fell 0.3% to 7.2178 per dollar

  • The British pound rose 0.2% to $1.2567

Cryptocurrencies

  • Bitcoin rose 0.7% to $64,223.48

  • Ether rose 1.1% to $3,173.21

Bonds

Commodities

  • Brent crude rose 0.9% to $83.51 a barrel

  • Spot gold rose 0.5% to $2,313.38 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Sangmi Cha, Abhishek Vishnoi and Chiranjivi Chakraborty.

(An early version of the story was corrected to remove reference to London trading.)

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