European shares rose on Friday along with global stocks as investors took comfort in underlying economic strength and started March on a high note. Bonds halted declines.
(Bloomberg) — European shares rose on Friday along with global stocks as investors took comfort in underlying economic strength and started March on a high note. Bonds halted declines.
A gauge of European stocks climbed 0.6% and headed for a weekly gain. S&P 500 futures ticked higher after the underlying gauge clawed back a weekly loss Thursday. Asian equities rose about 1%, led higher by gains in Hong Kong and Tokyo.
Stocks have weathered the shift to more hawkish rate expectations so far in March, shrugging off bets for a higher Federal Reserve rates peak and a three-month high in the US 10-year Treasury yield. Earnings have held up well this season as economic resilience props up corporate balance sheets.
“Equity markets now look to be responding more to the brightening growth outlook, which means they are likely in a better place to absorb the prospect of an extra 50bp or more in terminal rates,” Barclays Plc strategists led by Emmanuel Cau wrote in a note. “The rates-equity-growth paradigm of last year (higher inflation driving rates higher, pressuring valuations just as growth was falling dramatically) may be changing.”
The move higher in US Treasury yields paused Friday, with the 10-year benchmark slipping five basis points to 4%.
Read: Sinking Bond Markets Send a Message to Equities: Taking Stock
Data Thursday showing continued labor market resilience supported the case for the Fed to keep tightening, a theme that pushed almost every major asset into the red in February as traders braced for higher rates to curb rampant inflation.
And March’s rebound looks tentative in a market with little conviction and where investors are taking cover from an onslaught of rate increases. Cash funds attracted inflows of $68 billion in the week through March 1, according to a Bank of America note citing EPFR Global data.
“There is a cohort of investors who think the Fed may have to hike a lot more and that’s why interest rates are rising as much as they have recently,” Priya Misra, global head of rates strategy at TD Securities, said on Bloomberg Television.
Swaps markets are now pricing a peak Fed policy rate of 5.5% in September, and some traders even bet that the benchmark interest rate could rise to 6%.
After the US market closed Thursday, Federal Reserve Governor Christopher Waller said that he’d favor raising interest rates even more than his current outlook if economic indicators continue to come in hotter than expected.
In other markets, Bitcoin fell to the lowest level in more than two weeks on wider retreat in the crypto markets as investors assessed the fallout of crypto-friendly US bank Silvergate Capital Corp.
Oil headed for a first weekly gain in three weeks as optimism over China’s recovery offset persistent concerns on tighter US monetary policy. Gold climbed and was poised for the best week since mid January.
Some of the main moves in markets:
Stocks
- The Stoxx Europe 600 rose 0.6% as of 9:52 a.m. London time
- S&P 500 futures rose 0.1%
- Nasdaq 100 futures rose 0.1%
- Futures on the Dow Jones Industrial Average were little changed
- The MSCI Asia Pacific Index rose 1.1%
- The MSCI Emerging Markets Index rose 0.7%
Currencies
- The Bloomberg Dollar Spot Index fell 0.3%
- The euro rose 0.1% to $1.0610
- The Japanese yen rose 0.4% to 136.16 per dollar
- The offshore yuan rose 0.2% to 6.9079 per dollar
- The British pound rose 0.3% to $1.1986
Cryptocurrencies
- Bitcoin fell 4.4% to $22,378.41
- Ether fell 4.5% to $1,567.81
Bonds
- The yield on 10-year Treasuries declined five basis points to 4.01%
- Germany’s 10-year yield declined four basis points to 2.71%
- Britain’s 10-year yield declined four basis points to 3.84%
Commodities
- Brent crude fell 0.1% to $84.65 a barrel
- Spot gold rose 0.5% to $1,845.67 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Rob Verdonck, Brett Miller and Tassia Sipahutar.
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