European Stocks Set to Rise on Fed Rate-Cut Bets: Markets Wrap


(Bloomberg) — European equity futures rose, tracking a record S&P 500 close, on optimism about US interest-rate cuts after Federal Reserve Chair Jerome Powell said inflation is getting back on a downward path.

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The MSCI AC Asia Pacific Index headed for its longest stretch of gains since May. Japanese equities climbed, with the benchmarks now less than 1% from their record highs. SoftBank Group Corp. shares traded above their lifetime closing high for the first time in three years, buoyed by a global surge in AI and chip investment. Singaporean stocks outperformed on the strength of banking shares.

Futures contracts for the S&P 500 edged lower after the benchmark closed above 5,500 for the first time, the gauge’s 32nd record this year. Tesla Inc. surged 10% to lead gains in megacaps, helping the Nasdaq 100 close above the 20,000 mark for the first time.

The new record high close in the S&P 500 and Nasdaq “could also be taken as another win given the psychological significance that ‘round numbers’ hold,” said Chris Weston, head of research at Pepperstone Group in Melbourne.

In other markets, Australia’s three-year bond yield extended its rise after better-than-expected retail sales data reinforced the case for a rate hike.

Investors are looking to US initial jobless claims and ADP employment data due Wednesday to gain more clues on the policy outlook. Fed Chair Powell acknowledged the central bank has made “quite a bit of progress” in reducing inflation but emphasized officials need more evidence before lowering interest rates.

In China, services activity expanded at the slowest pace in eight months in June, a private gauge showed, a slowdown that may add to worries over the economy’s outlook. Stocks in Hong Kong gained, while those on the mainland fell.

In the US, equities keep defying doomsayers amid solid corporate earnings, AI mania and expectations that interest rates will drop, adding more than $16 trillion to the S&P 500’s value from a closing low on October 2022. A lack of any meaningful pullback has given bulls conviction that the rally is sustainable.

While the US market will close early on Wednesday due to Thursday’s July 4 holiday, investors are also gearing up for the all-important US payrolls reading due Friday. Economists expect the report to show employers added about 190,000 workers in June and the unemployment rate likely held at 4%.

Elsewhere, oil climbed to near a two-month high, while the Bloomberg Dollar Spot Index and Treasury yields were little changed.

Key events this week:

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

  • US Fed minutes, ADP employment, ISM Services, factory orders, initial jobless claims, durable goods, Wednesday

  • Fed’s John Williams speaks, Wednesday

  • UK general election, Thursday

  • US Independence Day holiday, Thursday

  • Eurozone retail sales, Friday

  • US jobs report, Friday

  • Fed’s John Williams speaks, Friday

Some of the main moves in markets:

Stocks

  • S&P 500 futures fell 0.1% as of 6:36 a.m. London time

  • Nikkei 225 futures (OSE) rose 1.4%

  • Japan’s Topix rose 0.6%

  • Australia’s S&P/ASX 200 rose 0.2%

  • Hong Kong’s Hang Seng rose 0.9%

  • The Shanghai Composite fell 0.5%

  • Euro Stoxx 50 futures rose 0.4%

  • Nasdaq 100 futures were little changed

  • Australia’s S&P/ASX 200 rose 0.2%

Currencies

  • The Bloomberg Dollar Spot Index was little changed

  • The euro was little changed at $1.0739

  • The Japanese yen fell 0.2% to 161.81 per dollar

  • The offshore yuan was little changed at 7.3102 per dollar

  • The Australian dollar was little changed at $0.6673

  • The British pound was little changed at $1.2681

Cryptocurrencies

  • Bitcoin fell 1.7% to $60,874.68

  • Ether fell 1.7% to $3,356.87

Bonds

Commodities

  • West Texas Intermediate crude rose 0.5% to $83.21 a barrel

  • Spot gold rose 0.2% to $2,334.30 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Rob Verdonck.

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