Stocks, Bonds Tick Higher After Quarter of Losses: Markets Wrap

Stocks rose on the last trading day of the quarter and a global bond selloff eased after dovish-leaning comments from Federal Reserve policymakers and reports of a possible meeting between US and Chinese leaders.

(Bloomberg) — Stocks rose on the last trading day of the quarter and a global bond selloff eased after dovish-leaning comments from Federal Reserve policymakers and reports of a possible meeting between US and Chinese leaders.

Europe’s Stoxx 600 equity index rose more than 0.5% at open, buoyed also by data showing a fall in French inflation. Gains were led by luxury stocks after Bank of America strategists raised their view on the sector to overweight. The moves signal relief after a quarter that’s put 30-year borrowing costs on track for their steepest increase since 2009.

The uptick in sentiment follows a strong Wall Street close on Thursday, especially for tech blue chips such as Nvidia Corp. and Meta Platforms Inc. Some of the gains were down to Fed rate-setters’ comments, such as Richmond Fed chief Thomas Barkin who said the US would likely skirt a severe downturn. Meanwhile, his Chicago Fed counterpart Austan Goolsbee said policymakers were at risk of overshooting on interest rates.

The optimism rippled into the Asian session, lifting shares in Hong Kong and Australia, though mainland Chinese markets are shut through the end of next week. Adding to positive sentiment, the Wall Street Journal reported China’s Vice Premier He Lifeng and Foreign Minister Wang Yi are discussing possible visits to the US to prepare for a potential summit between Xi Jinping and Joe Biden.

The July-September quarter has been the worst for MSCI’s all-country Index since September 2022, as an oil price surge has fanned fears for inflation and economic growth prospects. Realization has sunk in that central banks will not cut interest rates any time soon, and the jury still remains out on whether the US economy can dodge recession.

On the inflation front, French price growth unexpectedly slowed, a day after Germany reported inflation at the lowest level in two years. Economists expect the euro-area print due later Friday will show headline and core inflation dropping below 5%, easing pressure on the European Central Bank.

The US personal consumption expenditures price index is due later Friday and could determine whether the Fed will raise rates further from 22-year highs.

In currency markets, the dollar weakened against Group-of-10 peers, though Bloomberg’s index of the greenback has still gained 2.6% this quarter. The yen briefly extended losses after the central bank announced an unscheduled bond-buying operation.

Key events this week:

Eurozone CPI, Friday
US consumer spending, wholesale inventories, University of Michigan consumer sentiment, Friday
ECB President Christine Lagarde speaks, Friday
New York Fed President John Williams speaks, Friday

Some of the main moves in markets:

Stocks

The Stoxx Europe 600 rose 1% as of 8:32 a.m. London time
S&P 500 futures rose 0.3%
Nasdaq 100 futures rose 0.5%
Futures on the Dow Jones Industrial Average rose 0.3%
The MSCI Asia Pacific Index rose 0.7%
The MSCI Emerging Markets Index rose 1.1%

Currencies

The Bloomberg Dollar Spot Index fell 0.4%
The euro rose 0.3% to $1.0601
The Japanese yen rose 0.4% to 148.69 per dollar
The offshore yuan rose 0.2% to 7.2829 per dollar
The British pound rose 0.4% to $1.2246

Cryptocurrencies

Bitcoin fell 0.2% to $27,047.03
Ether rose 0.4% to $1,663.55

Bonds

The yield on 10-year Treasuries declined three basis points to 4.54%
Germany’s 10-year yield declined six basis points to 2.87%
Britain’s 10-year yield declined five basis points to 4.43%

Commodities

Brent crude was little changed
Spot gold rose 0.4% to $1,871.65 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Rob Verdonck and Abhishek Vishnoi.

(A previous version was corrected for mentioning Korean stocks when Korea is shut for a holiday)

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