European stock futures advanced with Asian equities as positive momentum picked up on Tuesday following a late recovery in post-holiday trading on Wall Street.
(Bloomberg) — European stock futures advanced with Asian equities as positive momentum picked up on Tuesday following a late recovery in post-holiday trading on Wall Street.
The dollar edged down after three days of gains, Treasury yields ticked lower and Bitcoin punched above $30,000 for the first time since June as it rallied more than 80% since the start of the year.
Japanese shares climbed following the dovish stance of the new Bank of Japan governor, Kazuo Ueda, and on a report that Warren Buffett is turning his focus back to Japan. Ueda has signaled that any significant changes to monetary policy may be unlikely for now. The Nikkei reported that Buffett is looking to increase his exposure to Japanese stocks.
South Korea’s Kospi moved higher as the central bank held interest rates unchanged while the Australian market showed strong gains after the Easter long weekend. Futures for the Euro Stoxx 50 jumped about 0.7% and contracts for the S&P 500 rose around 0.2%.
Gains in Hong Kong and Shanghai faded amid focus on Chinese inflation data. Consumer prices were softer than expectations and deflation in factory-gate prices matched estimates, likely keeping the stimulus option open for policymakers.
Despite the softness Tuesday in China, Catherine Yeung of Fidelity International said she saw more opportunity in the region’s equity markets than on Wall Street.
“We’ve had 10 months where it’s basically traded sideways,” the Hong Kong-based investment director said of the US market. “Ex some of the strong rallies where it’s really been mega-cap driven, we’re basically moving nowhere. On the flip side of the coin, Chinese equity markets, Asian equity markets, because of our inflation situation here, look a lot more appealing,” she said on Bloomberg Television.
Markets are pricing for a strong likelihood the Federal Reserve will hike interest rates by a quarter-point May 3 to contain inflation. That’s in contrast to Asian central banks that are starting to pause. It’s also a stark turnaround from March 22 when the Fed set its policy band at 4.75%-5% and the odds of a May rate hike almost vanished amid the turmoil in the banking sector.
The yield on policy-sensitive two-year Treasuries held near 4% Tuesday after climbing Monday as traders positioned for the Fed to hike.
A gauge of dollar strength fell 0.2%, with the Australian dollar leading gains among Group-of-10 currencies. The yen trimmed some of its loss of more than 1% from Monday.
In the US Monday, the S&P 500 eked out a gain in the final minutes of the session after spending most of the day in the red. The Nasdaq 100 pared losses into the close, ending marginally lower as an Apple Inc. report that personal computer shipments fell sharply weighed on the tech-heavy benchmark.
Investors are now awaiting Wednesday’s report on consumer prices, which is expected to show a 0.4% monthly increase in the core consumer price index, for more assurance on the Fed’s rate path. Meanwhile, Wells Fargo & Co., JPMorgan Chase & Co. and Citigroup Inc. will kick off reporting for the banking sector Friday, offering insights on the health of the financial system.
In a report Monday, the International Monetary Fund put forward that rates in the US and other industrial countries will revert toward ultra-low levels instead of the 1.5% to 2% real neutral interest rate former US Treasury Secretary Lawrence Summers has suggested.
Elsewhere in markets, oil largely reversed Monday’s loss, with West Texas Intermediate trading back above $80 a barrel. Gold was slightly higher and near $2,000 an ounce.
Key events this week:
- IMF global financial stability report, Tuesday
- Chicago Fed’s Austan Goolsbee, Minneapolis Fed’s Neel Kashkari and Philadelphia Fed’s Patrick Harker speak at separate events, Tuesday
- Canada rate decision, Wednesday
- US FOMC minutes, CPI, Wednesday
- Richmond Fed’s Thomas Barkin speaks, Wednesday
- China trade, Thursday
- 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
Some of the main moves in markets:
Stocks
- S&P 500 futures rose 0.2% as of 7:18 a.m. in London. The S&P 500 rose 0.1%
- Nasdaq 100 futures were little changed. The Nasdaq 100 was little changed
- Euro Stoxx 50 futures rose 0.7%
- The Hang Seng Index rose 0.4%
- The Shanghai Composite fell 0.3%
- Japan’s Topix rose 0.8%
- Australia’s S&P/ASX 200 rose 1.3%
Currencies
- The Bloomberg Dollar Spot Index fell 0.2%
- The euro rose 0.3% to $1.0890
- The Japanese yen rose 0.2% to 133.35 per dollar
- The offshore yuan was little changed at 6.8900 per dollar
- The Australian dollar rose 0.6% to $0.6678
- The British pound rose 0.2% to $1.2412
Cryptocurrencies
- Bitcoin rose 3% to $30,020.46
- Ether rose 1.7% to $1,918.73
Bonds
- The yield on 10-year Treasuries declined one basis point to 3.41%
- Australia’s 10-year yield advanced five basis points to 3.23%
Commodities
- West Texas Intermediate crude rose 1% to $80.55 a barrel
- Spot gold rose 0.5% to $2,001.05 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Stephen Kirkland.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.