European shares edged higher as speculation the Federal Reserve is nearing the end of its tightening cycle in the US offset signs of hotter-than-expected inflation in the euro zone.
(Bloomberg) — European shares edged higher as speculation the Federal Reserve is nearing the end of its tightening cycle in the US offset signs of hotter-than-expected inflation in the euro zone.
Europe’s Stoxx 600 benchmark rose 0.2%, trimming its monthly retreat. UBS Group AG jumped more than 7% after posting the biggest-ever quarterly profit for a bank as a result of its emergency takeover of Credit Suisse Group AG. US equity futures were steady.
Markets are closing out the month with inflation and economic data center stage. While Treasury yields fell and US stocks clawed back some of August’s losses after weaker-than-expected economic numbers on Wednesday, French inflation accelerated in August and traders will be watching price-growth number due later for the euro-zone.
“A glimmer of hope is that when August was bad, September tends to be not that bad,” said Ulrich Urbahn, head of multi-asset strategy and research at Berenberg. “Higher-than-expected inflation in France and higher European bond yields are dampening equity sentiment this morning, and the lackluster Chinese data also does not boost optimism.”
Equity benchmarks for mainland China and Hong Kong fell after manufacturing activity in China contracted again, albeit less than feared, while the services PMI showed slowing expansion. The offshore yuan and Australian dollar pared earlier gains against the greenback.
The latest signs of weakness in China were accompanied by further signs of official support. The People’s Bank of China met with lenders and private businesses to discuss improving their access to funding. Two of China’s biggest cities lowered mortgage requirements for some homebuyers following central government guidance, fanning expectations that more will follow suit to arrest a record housing slowdown.
“The problems China have now are deep-seated, structural ones,” said Rob Subbaraman, chief economist and head of global markets research for Nomura Singapore Limited, on Bloomberg Television. “It’s not clear to us that these piecemeal policy measures are really enough to revive the economy. We remain cautious.”
The S&P 500 is headed for the worst month since February, while the Nasdaq 100 is set for the largest decline this year. Asian and global stocks are also on pace for the biggest monthly losses since February.
The price of oil erased an earlier increase after ending Wednesday with its fifth daily advance. Gold edged higher after a string of gains this week. Bitcoin traded above $27,000.
Key events this week:
- Eurozone CPI, unemployment, Thursday
- ECB publishes account of July monetary policy meeting, Thursday
- US personal spending and income, initial jobless claims, Thursday
- China Caixin manufacturing PMI, Friday
- Eurozone S&P Global Eurozone Manufacturing PMI, Friday
- South African central bank governor Lesetja Kganyago, Atlanta Fed President Raphael Bostic, BOE’s Huw Pill, IMF’s Gita Gopinath on panel at the South African Reserve Bank conference, Friday
- Boston Fed President Susan Collins speaks at virtual event, Friday
- US unemployment, nonfarm payrolls, light vehicle sales, ISM manufacturing, construction spending, Friday
Some of the main moves in markets:
Stocks
- The Stoxx Europe 600 rose 0.2% as of 8:43 a.m. London time
- S&P 500 futures rose 0.1%
- Nasdaq 100 futures were little changed
- Futures on the Dow Jones Industrial Average rose 0.3%
- The MSCI Asia Pacific Index was little changed
- The MSCI Emerging Markets Index fell 0.4%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro fell 0.2% to $1.0902
- The Japanese yen rose 0.3% to 145.86 per dollar
- The offshore yuan was little changed at 7.2973 per dollar
- The British pound was little changed at $1.2715
Cryptocurrencies
- Bitcoin was little changed at $27,249.24
- Ether was little changed at $1,705.06
Bonds
- The yield on 10-year Treasuries was little changed at 4.11%
- Germany’s 10-year yield declined two basis points to 2.53%
- Britain’s 10-year yield was little changed at 4.43%
Commodities
- Brent crude was little changed
- Spot gold rose 0.2% to $1,945.61 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Sagarika Jaisinghani.
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