Stocks Rally as China Eases Travel Restrictions: Markets Wrap

Global stocks advanced, with France’s equity benchmark jumping 1%, after China lifted travel curbs.

(Bloomberg) — Global stocks advanced, with France’s equity benchmark jumping 1%, after China lifted travel curbs. 

The mood in markets was positive ahead of the key US inflation data, which may provide clues on the Federal Reserve’s next steps. European travel and luxury companies were among the biggest gainers in the Stoxx 600 Index on speculation that companies will benefit an increase in Chinese tourism spending. The dollar weakened and S&P 500 futures added 0.5%. 

The US report on consumer prices will be critical for investors trying to determine whether the Fed will stop raising interest rates. It’s expected to show a second straight reading for so-called core inflation that is consistent with the Fed’s 2% target on an annualized basis, according to a preview from Bloomberg Economics. The consumer price index, excluding food and energy, probably rose 0.2% last month, following a similar increase in June, they said. 

“A higher-than-expected number would produce some short-term equity and bond volatility,” said Andrew Bell, chief executive officer at Witan Investment Trust. “But I doubt it would change expectations for the peak in Fed rates as there is a weight of evidence pointing to the economy disinflating.” 

One potential pressure point could be commodities, which are rising after a year of falling. Oil traded near the highest level in almost nine months, with West Texas Intermediate futures above $84 a barrel after climbing 3% over the previous two sessions. 

Markets Will Be Blindsided by Inflation’s Comeback: MacroScope

Meanwhile, LVMH and Hermes International added at least 2%. China’s Ministry of Culture and Tourism said it would lift a group travel ban to countries including the US, UK, Australia, South Korea and Japan. Buyers from China account for about 25% of European luxury-goods sales, including purchases made by tourists, according to latest estimates from Goldman Sachs Group Inc.

LVMH Tops $22 Billion Luxury Rally as China Lifts Travel Ban 

In the US, Walt Disney Co. shares rose 1.6% in premarket trading after saying capital spending and outlays for movies and TV shows are coming in lower than projected. 

Treasuries were steady, with the 10-year yield at 4%. The last big US bond sale of the week will take place later with the sale of 30-year notes. Despite all the concerns recently that the auctions would face investor resistance, demand for the debt has so far been strong.

Key events this week:

  • US initial jobless claims, CPI, Thursday
  • Atlanta Fed President Raphael Bostic pre-recorded remarks for employment webinar, Thursday
  • UK industrial production, GDP, Friday
  • US University of Michigan consumer sentiment, PPI, Friday

Some of the main moves in markets:

Stocks

  • S&P 500 futures rose 0.5% as of 6:54 a.m. New York time
  • Nasdaq 100 futures rose 0.6%
  • Futures on the Dow Jones Industrial Average rose 0.5%
  • The Stoxx Europe 600 rose 0.4%
  • The MSCI World index rose 0.2%

Currencies

  • The Bloomberg Dollar Spot Index fell 0.3%
  • The euro rose 0.5% to $1.1027
  • The British pound rose 0.4% to $1.2770
  • The Japanese yen was little changed at 143.77 per dollar

Cryptocurrencies

  • Bitcoin rose 0.2% to $29,527.7
  • Ether was little changed at $1,852.35

Bonds

  • The yield on 10-year Treasuries was little changed at 4.00%
  • Germany’s 10-year yield advanced three basis points to 2.53%
  • Britain’s 10-year yield advanced one basis point to 4.38%

Commodities

  • West Texas Intermediate crude fell 0.4% to $84.08 a barrel
  • Gold futures rose 0.2% to $1,954.60 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Denitsa Tsekova and Richard Henderson.

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