European stocks climbed with US equity futures, 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) — European stocks climbed with US equity futures, building on Wall Street’s advance after Federal Reserve Chair Jerome Powell said the central bank had made progress in its battle against inflation.
The Stoxx Europe 600 index added about 0.6%, with traders now looking ahead to the European Central Bank’s policy decision later Thursday after mixed inflation data reignited debate about how much rates in the euro area should rise. Technology stocks led the advance, buoyed by an upbeat outlook from German chipmaker Infineon Technologies AG.
Futures on the S&P 500 and Nasdaq 100 rose, suggesting Wall Street is set to build on Wednesday’s gains. Powell’s comment that the “disinflation process has started” suggested that the aggressive tightening cycle is starting to reduce the pace of price growth, helping the S&P 500 jump more than 1%. The tech-heavy Nasdaq outperformed major benchmarks, closing at the highest since September.
“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.
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-year to 10-year zone. European bonds broadly tracked the closing moves in Treasuries Wednesday, with Germany’s 10-year yield down about four basis points.
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 policy makers still anticipate.
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.
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 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 ECB 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
- The Stoxx Europe 600 rose 0.6% as of 8:19 a.m. London time
- S&P 500 futures rose 0.4%
- Nasdaq 100 futures rose 1%
- Futures on the Dow Jones Industrial Average fell 0.1%
- The MSCI Asia Pacific Index rose 0.4%
- The MSCI Emerging Markets Index rose 0.4%
Currencies
- The Bloomberg Dollar Spot Index fell 0.2%
- The euro rose 0.2% to $1.1009
- The Japanese yen rose 0.3% to 128.57 per dollar
- The offshore yuan was little changed at 6.7235 per dollar
- The British pound rose 0.1% to $1.2390
Cryptocurrencies
- Bitcoin rose 0.6% to $23,824.33
- Ether rose 2% to $1,668.67
Bonds
- The yield on 10-year Treasuries declined two basis points to 3.40%
- Germany’s 10-year yield declined five basis points to 2.24%
- Britain’s 10-year yield declined eight basis points to 3.23%
Commodities
- Brent crude rose 0.4% to $83.21 a barrel
- Spot gold rose 0.5% to $1,959.38 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Tassia Sipahutar.
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