(Bloomberg) — Stocks advanced on speculation that a cooling economy will give the Federal Reserve room to lower rates this year. Treasury yields climbed after their largest two-day drop this year.
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Europe’s Stoxx 600 Index climbed 0.5% and contracts for the S&P 500 and Nasdaq 100 ticked higher. The 10-year Treasury yield rose two basis points to 4.35% after sliding six basis points on Tuesday.
Markets are shifting focus to the slew of labor-market readings this week, including Friday’s US jobs report, for further clues on when the Fed will deploy rate cuts. US job openings hit the lowest since 2021, the so-called JOLTS report showed Tuesday. Numbers due later Wednesday include private payroll figures and the latest reading on the US services sector.
“We are starting to see labor market slackness, which gives the Fed more flexibility,” Justin Onuekwusi, chief investment officer at St James’s Place Management, said in an interview. “Given we have seen weakaness in labor market data this past week, all eyes will be on this number,” he said of the payrolls data.
Retailers led the advance in Europe, with Zara owner Inditex SA rallying more than 5% after a stronger-than-expected trading update.
In Asia, Indian stocks outperformed as an alliance partner of Prime Minister Narendra Modi’s party affirmed support to form a coalition government. The Nifty 50 Index rose more than 2%, recouping some of Tuesday’s loss when the gauge fell the most in four years.
Meanwhile, traders are looking ahead to an expected reduction in the European Central Bank’s key lending rate from a record-high 4% on Thursday. While the policy path beyond this week’s cut is unclear, a start to the ECB’s easing cycle before the Fed, along with an improving outlook for earnings in Europe, could help the Stoxx 600 build on its record-setting rally this year.
“All in all, it’s a pretty good combination for stocks,” said Lilia Peytavin, a portfolio strategist at Goldman Sachs Group Inc. in Paris. “What’s crucial on Thursday is the new growth and inflation outlook of the ECB. We’re expecting growth to rebound in the euro zone in the coming quarters,” a development that should be positive for so-called cyclical stocks.
A Bloomberg gauge of dollar strength was little changed after eking out gains in the past two sessions. The yen pulled back against the greenback after Japan’s April wage data raised questions about the strength of gains in pay.
In commodities, oil was little changed after falling on Tuesday following an industry report that pointed to an increase in US crude stockpiles. Bitcoin topped $70,000.
Key events this week:
Eurozone S&P Global Services PMI, PPI, Wednesday
Canada rate decision, Wednesday
US ADP Employment, S&P services PMI, ISM services, Wednesday
Eurozone retail sales, ECB rate decision, Thursday
US initial jobless claims, trade, Thursday
China trade, forex reserves, Friday
Eurozone GDP, Friday
US unemployment rate, nonfarm payrolls, Friday
Some of the main moves in markets:
Stocks
The Stoxx Europe 600 rose 0.5% as of 9:46 a.m. London time
S&P 500 futures rose 0.1%
Nasdaq 100 futures rose 0.3%
Futures on the Dow Jones Industrial Average rose 0.2%
The MSCI Asia Pacific Index was little changed
The MSCI Emerging Markets Index rose 0.9%
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro was little changed at $1.0875
The Japanese yen fell 0.9% to 156.21 per dollar
The offshore yuan fell 0.1% to 7.2561 per dollar
The British pound was little changed at $1.2773
Cryptocurrencies
Bitcoin rose 0.9% to $71,038.76
Ether was little changed at $3,805.6
Bonds
The yield on 10-year Treasuries advanced two basis points to 4.35%
Germany’s 10-year yield was little changed at 2.54%
Britain’s 10-year yield advanced three basis points to 4.21%
Commodities
Brent crude rose 0.3% to $77.77 a barrel
Spot gold rose 0.3% to $2,333.64 an ounce
This story was produced with the assistance of Bloomberg Automation.
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