US and European stock futures climbed with Asian shares, building on Wall Street’s advance after Federal Reserve Chair Jerome Powell said the central bank had made progress in its battle against inflation.
(Bloomberg) — US and European stock futures climbed with Asian shares, building on Wall Street’s advance after Federal Reserve Chair Jerome Powell said the central bank had made progress in its battle against inflation.
A benchmark of Asian equities climbed about 0.5%, with Hong Kong-listed technology companies among the top performers. The picture was more mixed in Japan and mainland China, while Adani Group companies led the Indian market lower.
The dollar continued its decline against both Group-of-10 and emerging-markets currencies, and extended its fall for a third day. A gauge of the greenback’s strength was at the lowest level since April as global investors position for a potential peak in US interest rates.
Treasury yields held a drop from the US session of about 10 basis points in key maturities across the 2-10 year zone. Australian and New Zealand bonds broadly tracked the closing moves in Treasuries Wednesday. Japan’s benchmark 10-year yield rose to just below the central bank’s 0.5% ceiling.
Powell’s comment that the “disinflation process has started” suggested that the aggressive tightening cycle is starting to have its desired effect of reducing the pace of price growth, helping the S&P 500 jump more than 1%. The tech-heavy Nasdaq 100 outperformed major benchmarks, closing at the highest since September.
Positioning in US swaps markets assumes the Fed is getting closer to cutting rates as traders bet that economic conditions are likely to keep it from the additional rate increases that policymakers still anticipate.
“The more he talked, the more dovish he was,” Charles-Henry Monchau, chief investment officer at Banque Syz, said of Powell’s briefing. “It’s possible we’ll continue to see a series of volatility, but definitely the conditions seems to be more risk-on than last year,” he said on Bloomberg Television.
Adding to the positive tone, in US after-hours trading, Meta Platforms Inc. surged, leading social-media stocks higher, after reporting better-than-expected sales during the holiday quarter.
“US sector performance was consistent with the big rally in fixed income across the curve, which for Asia-Pacific should support duration proxies like tech and soft landing beneficiaries like consumer discretionary,” said Chamath De Silva, senior portfolio manager for BetaShares Holdings.
The Adani Group’s deepening crisis continued to rumble through markets on Thursday. Adani Enterprises Ltd. slumped more than 15%, before paring some of the loss, after abandoning its follow-on share sale to insulate investors in the offering from the recent rout. The other nine stocks in the group also fell.
The meltdown has wiped out $104 billion in market value for the group’s stocks since US short seller Hindenburg Research made fraud allegations against the conglomerate.
Elsewhere in markets, oil staged a partial rebound after slumping on Wednesday as the dollar fell and traders weighed the potential for better demand in China.
Gold hovered around a nine-month high and Bitcoin hit the highest since August in the wake of Fed decision.
Later Thursday, central banks in Europe will be center stage with both the European Central Bank and the Bank of England expected to raise rates by half a percentage point each.
Key events this week:
- Eurozone ECB rate decision, President Christine Lagarde press conference, Thursday
- UK BOE rate decision, Thursday
- US factory orders, initial jobless claims, US durable goods, Thursday
- Earnings Thursday include: Alphabet, Apple, Amazon, Qualcomm
- Eurozone S&P Global Eurozone Services PMI, PPI, Friday
- US unemployment, nonfarm payrolls, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures rose 0.3% as of 6:59 a.m. London time. The S&P 500 rose 1.1%
- Nasdaq 100 futures rose 1%. The Nasdaq 100 rose 2.2%
- Japan’s Topix fell 0.4%
- Australia’s S&P/ASX 200 index rose 0.1%
- Hong Kong’s Hang Seng Index rose 0.1%
- China’s Shanghai Composite Index was little changed
- Euro Stoxx 50 futures rose 0.7%
Currencies
- The Bloomberg Dollar Spot Index fell 0.2%
- The euro rose 0.1% to $1.1005
- The Japanese yen rose 0.2% to 128.66 per dollar
- The offshore yuan was little changed at 6.7186 per dollar
- The Australian dollar was little changed at $0.7140
- The British pound was little changed at $1.2382
Cryptocurrencies
- Bitcoin rose 0.5% to $23,793.72
- Ether rose 1.9% to $1,666.67
Bonds
- The yield on 10-year Treasuries declined one basis point to 3.41%
- Japan’s 10-year yield rose 1.5 basis points to 0.495%
- Australia’s 10-year yield declined three basis points to 3.54%
Commodities
- West Texas Intermediate crude rose 0.7% to $76.91 a barrel
- Spot gold rose 0.1% to $1,953.16 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Stephen Kirkland.
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