European stocks climbed after three days of declines, while US futures edged higher after the House passed a deal to avert a US default and Federal Reserve officials hinted at a pause in interest-rate hikes.
(Bloomberg) — European stocks climbed after three days of declines, while US futures edged higher after the House passed a deal to avert a US default and Federal Reserve officials hinted at a pause in interest-rate hikes.
Banks and carmakers were among the leading performers in the Stoxx Europe 600 index as data showed euro-area inflation slowed more than analysts’ estimates in May. Adnoc Logistics & Services, the maritime logistics unit of Abu Dhabi’s main energy company, soared as much as 52% on its debut after a hugely oversubscribed initial public offering. Airbus SE gained after Reuters reported a rise in aircraft deliveries.
Passage of the debt-ceiling deal struck by House Speaker Kevin McCarthy and President Joe Biden means the bill will be sent to the Senate days before the June 5 default deadline. The signs of optimism were helped along by comments from Fed officials who backed the possibility of holding rates unchanged the next meeting, and some encouraging economic data out of China.
“Finally, some good news is driving today’s optimism,” said Ludovica Scotto di Perta, a structured-product specialist at Swissquote Bank SA. “US raising the debt ceiling and sentiment that the Fed will pause are boosting risk appetite. It might only be temporary but we will take anything at this point.”
The euro rallied against the dollar after data showed underlying inflation in the euro zone dipped by more than expected in May, though that may not stop the European Central Bank from raising rates. European Central Bank Governing Council member Olli Rehn said the bank won’t contemplate lowering borrowing costs before core consumer-price growth slows in a continuous manner.
Meanwhile, a rally in companies exposed to the development of artificial intelligence-related products continued to cool in US premarket trading. Software maker C3.ai Inc. plunged as much as 22% after a disappointing sales outlook. Nvidia Corp., whose meteoric rise had fueled the rally, was steady after losing some ground on Wednesday.
Among other individual movers, Salesforce Inc. slumped abut 6% after it gave a lackluster outlook for future sales. Advance Auto Parts Inc. extended a decline after cutting earnings and sales guidance.
“A June swoon may be in the cards as the S&P 500 struggles to clear key resistance at 4,200,” said Adam Turnquist, chief technical strategist at LPL Financial. “While a deal in Washington could be a catalyst for a breakout, overbought conditions in the technology sector and mega-cap space — the primary drivers of this year’s market advance — could make this a high hurdle for the market to clear on a near-term basis, especially without broader participation.”
A gauge of the dollar dipped, while Treasury yields ticked higher.
Hopes for a Fed pause were partly pared back after Wednesday’s JOLTS jobs report for April showed more than 10 million openings, the highest in three months and above consensus estimates.
But Fed Governor Philip Jefferson said the central bank is inclined to keep interest rates steady in June to assess the economic outlook. His remarks were echoed by Philadelphia Fed President Patrick Harker, who said, “I think we can take a bit of a skip for a meeting.”
Attention turns next to US jobless claims data due later Thursday, before Friday’s nonfarm payrolls.
Most Asian benchmarks rose, though gains in Chinese stocks faded as investors studied mixed readings on the country’s manufacturing activity. Caixin manufacturing data for May showed an expansion, exceeding forecasts for a small contraction. The numbers followed official figures Wednesday that showed a further contraction in activity.
Industrial metals climbed from six-month lows, led by copper and nickel. China’s sluggish economy has been a key driver of weakness demand for raw materials.
Key events this week:
- US construction spending, initial jobless claims, ISM Manufacturing, Thursday
- ECB President Christine Lagarde speaks at conference, Thursday
- Fed’s Patrick Harker speaks at webinar, Thursday
- US unemployment, nonfarm payrolls, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures rose 0.2% as of 7 a.m. New York time
- Nasdaq 100 futures rose 0.1%
- Futures on the Dow Jones Industrial Average were little changed
- The Stoxx Europe 600 rose 0.8%
- The MSCI World index rose 0.3%
Currencies
- The Bloomberg Dollar Spot Index fell 0.1%
- The euro rose 0.2% to $1.0710
- The British pound rose 0.2% to $1.2465
- The Japanese yen fell 0.1% to 139.54 per dollar
Cryptocurrencies
- Bitcoin fell 0.9% to $26,869.26
- Ether fell 0.3% to $1,860.15
Bonds
- The yield on 10-year Treasuries advanced two basis points to 3.66%
- Germany’s 10-year yield advanced one basis point to 2.29%
- Britain’s 10-year yield was little changed at 4.18%
Commodities
- West Texas Intermediate crude fell 0.8% to $67.56 a barrel
- Gold futures were little changed
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Anchalee Worrachate and Sagarika Jaisinghani.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.