European equities rose with US equity futures on Thursday as investors digested inflation data and parsed comments from policymakers to try to determine the end point of an era of aggressive rate hikes by global central banks.
(Bloomberg) — European equities rose with US equity futures on Thursday as investors digested inflation data and parsed comments from policymakers to try to determine the end point of an era of aggressive rate hikes by global central banks.
The Stoxx Europe 600 Index posted a modest gain after European Central Bank’s Governing Council member Francois Villeroy de Galhau said the bank has already finished most of the interest-rate increases. Contracts for US stocks pointed to a recovery after the S&P 500 and tech-heavy Nasdaq 100 closed Wednesday near session lows. Treasury yields stayed in a narrow range, with the two-year at 3.94%.
The rate-sensitive benchmark tumbled as much as 15 basis points Wednesday following the US inflation report, before paring the drop to trade under the 4% threshold.
The latest report on price growth offered evidence for both bond bulls and bears. While the year-on-year headline figure fell, core prices edged higher. Swaps markets still favor a quarter-point hike by the Federal Reserve in May, even as traders added to wagers that the Fed will cut interest rates before the end of this year at a faster pace than anticipated earlier in the week.
Read more: Traders Boost Bets on US Rate Cuts This Year After CPI
Meanwhile, minutes of the Fed’s March meeting published Wednesday showed policymakers scaled back expectations for rate hikes this year after a series of bank collapses roiled markets, and stressed they would remain vigilant for the potential of a credit crunch to further slow the economy. Officials forecast a “mild recession” starting later this year “given their assessment of the potential economic effects of the recent banking-sector developments.”
“Yes, they talked about recession, but they talked about the mild recessions. So no hard recession so far coming from these SVB fallouts,” Charles-Henry Monchau, chief investment officer at Syz Group, told Bloomberg Television, referring to the turmoil triggered by Silicon Valley Bank’s collapse.
Elsewhere, Alibaba Group Holding Ltd. fell 2% on a report its early backer SoftBank Group Corp. is moving to sell the majority of its stake in the company.
Read more: SoftBank Moves to Slash Alibaba Stake, Fueling $13 Billion Slump
In currencies, the US dollar weakened against most of its major peers. The pound held a gain after a report showed the UK economy stalled unexpectedly in February when strikes crippled the public services but is still likely to perform better than the Bank of England has expected.
Key events this week:
- US PPI, initial jobless claim, Thursday
- US retail sales, business inventories, industrial production, University of Michigan consumer sentiment, Friday
- Major US banks JPMorgan Chase, Wells Fargo and Citigroup report earnings, Friday
Stocks
- The Stoxx Europe 600 rose 0.4% as of 8:39 a.m. London time
- S&P 500 futures rose 0.2%
- Nasdaq 100 futures rose 0.3%
- Futures on the Dow Jones Industrial Average rose 0.2%
- The MSCI Asia Pacific Index was little changed
- The MSCI Emerging Markets Index was little changed
Currencies
- The Bloomberg Dollar Spot Index fell 0.2%
- The euro was little changed at $1.1000
- The Japanese yen was little changed at 133.09 per dollar
- The offshore yuan was little changed at 6.8780 per dollar
- The British pound rose 0.1% to $1.2498
Cryptocurrencies
- Bitcoin rose 0.3% to $30,068.34
- Ether rose 0.4% to $1,916.98
Bonds
- The yield on 10-year Treasuries was little changed at 3.39%
- Germany’s 10-year yield declined two basis points to 2.35%
- Britain’s 10-year yield declined two basis points to 3.55%
Commodities
- Brent crude fell 0.2% to $87.19 a barrel
- Spot gold rose 0.5% to $2,025.07 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Mark Cranfield and Jeanny Yu.
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