European stocks climbed, partly catching up with a rally on Wall Street Wednesday that pushed the tech-heavy Nasdaq 100 into a bull market amid bets that a peak in interest rates is near and bank turmoil will continue to ease.
(Bloomberg) — European stocks climbed, partly catching up with a rally on Wall Street Wednesday that pushed the tech-heavy Nasdaq 100 into a bull market amid bets that a peak in interest rates is near and bank turmoil will continue to ease.
Technology, real estate and retail shares led gains in the Stoxx Europe 600 Index, with Hennes & Mauritz AB soaring after the Swedish clothing company’s first-quarter results beat expectations. S&P 500 and Nasdaq 100 futures edged higher, as did a gauge of Asian equities.
In Wednesday’s New York trading, the Nasdaq 100 rose 1.9%, which cemented its 20% rebound from a low in December. The gauge, which includes Apple Inc., Microsoft Corp., and Amazon.com, closed at the highest level since August in a sign investors are preparing for the Federal Reserve to end its interest rate hiking cycle and potentially pivot to looser policy later this year.
Treasury yields ticked lower, following muted trading on Wednesday when the 10-year benchmark moved by the smallest margin in more than a month. The dollar gave up an earlier advance after strengthening as investors digested the latest remarks by Fed officials and looked ahead to core PCE data for clues on how the Fed’s next move. Investors now expect US rates to sit around 4.3% by the end of the year, around 70 basis points lower than the current level.
“The Fed remains in a very difficult position,” wrote Chris Senyek of Wolfe Research in a note. “With banks stabilizing, inflation still way above target, the labor market still historically strong, and the Fed desperately needing to rebuild credibility, our sense is that the FOMC will hike by 25 basis points on May 3.”
On the European economic front, Spanish inflation plummeted as energy costs retreated, though persistent underlying price pressures underscored the dilemma for the European Central Bank as it weighs how much to raise interest rates. March’s headline reading came in at 3.1% — down from February’s 6% and much lower than the 3.7% median estimate in a Bloomberg survey of economists.
In Asia, investors digested a busy day of Chinese earnings that included Agricultural Bank of China Ltd., Industrial & Commercial Bank of China Ltd., Bank of China Ltd., Bank of Communications Co., Air China Ltd., Country Garden Holdings, Citic Securities Co. and Great Wall Motor Co.
“Analysts are revising up their earnings,” said Audrey Goh, senior cross-asset strategist for Standard Chartered Wealth Management, speaking about Chinese equities on Bloomberg Television. “Consumption, fixed asset investments as well as even the distressed property sector are starting to show some signs of life and recovery.”
Elsewhere in markets, oil held its drop as lagging US diesel demand overshadowed a disruption to shipments from Turkey. Gold steadied and Bitcoin hovered above $28,000.
Key events this week:
- Eurozone economic confidence, consumer confidence, Thursday
- US GDP, initial jobless claims, Thursday
- Boston Fed President Susan Collins and Richmond Fed President Thomas Barkin speaks at event. Treasury Secretary Janet Yellen also speaks, Thursday
- China PMI, Friday
- Eurozone CPI, unemployment, Friday
- US consumer income, PCE deflator, 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 0.7% as of 8:22 a.m. London time
- S&P 500 futures rose 0.3%
- Nasdaq 100 futures rose 0.2%
- Futures on the Dow Jones Industrial Average rose 0.2%
- The MSCI Asia Pacific Index rose 0.2%
- The MSCI Emerging Markets Index rose 0.3%
Currencies
- The Bloomberg Dollar Spot Index fell 0.2%
- The euro was little changed at $1.0842
- The Japanese yen rose 0.5% to 132.25 per dollar
- The offshore yuan rose 0.3% to 6.8762 per dollar
- The British pound rose 0.2% to $1.2341
Cryptocurrencies
- Bitcoin rose 0.9% to $28,646.25
- Ether fell 0.2% to $1,799.54
Bonds
- The yield on 10-year Treasuries declined two basis points to 3.54%
- Germany’s 10-year yield declined eight basis points to 2.25%
- Britain’s 10-year yield declined four basis points to 3.43%
Commodities
- Brent crude rose 0.1% to $78.37 a barrel
- Spot gold rose 0.2% to $1,968.30 an ounce
This story was produced with the assistance of Bloomberg Automation.
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