(Bloomberg) — The stock market continued its climb as traders bet on US inflation prints and economic stimulus from China.
Read the most from Bloomberg
Risk-on tone boosted demand for technology stocks in Europe, while US benchmarks climbed after the Nasdaq 100 and S&P 500 closed at their highest levels since April 2022. Investors chasing the stock rally dump bonds, with yields on both the two-year Treasury and UK gilt trading near financial crisis highs.
Confidence is growing that the latest reading of the US consumer price index, due on Tuesday, will show that pressure has cooled enough for the Federal Reserve to allow policymakers to pause their tightening campaign on Wednesday. After 10 consecutive moves in the key rate since March 2022, this would be the first time they would skip a rate hike.
“Barring a significant upside surprise in CPI or media reports of a change in stance, the most likely outcome remains a bullish left,” Frederic Ducrozet, head of macroeconomic research at Pictet Wealth Management, wrote in a note to clients.
A hike in July is more likely, with swaps seeing the price of about a quarter point of additional tightening at next month’s meeting.
Meanwhile, a gauge of Asian equities rose more than 1% on the back of stimulus measures from China, partly reported by Bloomberg News earlier this month.
Investor speculation about a cut in China’s long-term policy rates intensified on Tuesday after the central bank unexpectedly lowered its seven-day reverse repurchase rate.
UK gilts fell after data showed Britain’s labor market unexpectedly tightened in April, with two-year yields rising to their highest since 2008.
the story continues
In commodities, oil gained ground and gold gained ground after heavy losses on Monday.
Major events of the week:
US CPI, Tuesday
Eurozone Industrial Production, Wednesday
US PPI, Wednesday
Federal Reserve rate decision, updated economic forecast, Jerome Powell’s press conference, Wednesday
IEA Oil Market Report, Wednesday
China Property Prices, Retail Sales, Industrial Production, Thursday
China’s central bank meeting to decide on one-year policy lending rate on Thursday
European Central Bank President Christine Lagarde holds press conference after Thursday’s rate decision
US Initial Jobless Claims, Retail Sales, Empire Building, Business Inventories, Industrial Production, Thursday
Bank of Japan Rate Decision, Friday
US University of Michigan Consumer Sentiment, Friday
Some key moves in the markets:
The Stoxx Europe 600 was up 0.3% as of 9:53 a.m. London time
S&P 500 futures rose 0.2%
Nasdaq 100 futures rose 0.5%
Futures on the Dow Jones Industrial Average were little changed.
MSCI Asia Pacific index rose 1.1%
MSCI Emerging Markets Index rose 1%
The Bloomberg Dollar Spot Index fell 0.2%
The euro rose 0.4% to $1.0803
The Japanese yen was little changed at 139.52 per dollar
The offshore yuan was little changed at 7.1625 per dollar
The British pound rose 0.4% to $1.2564
Bitcoin rose 1.2% to $26,211.12
Ether rose 0.9% to $1,754.54
The yield on the 10-year Treasury declined one basis point to 3.72%
Germany’s 10-year yield fell two basis points to 2.37%
UK 10-year yield rose three basis points to 4.37%
Brent crude rose 1% to $72.54 a barrel
Spot gold rose 0.3% to $1,964.19 an ounce
This story was produced with assistance from Bloomberg Automation.
With the assistance of Tassia Sipahutar.
Read the most from Bloomberg Businessweek
©2023 Bloomberg L.P.