European stocks posted modest gains along with US share futures at the start of the week with more earnings to provide a barometer of corporate health and the threat of recession.
(Bloomberg) — European stocks posted modest gains along with US share futures at the start of the week with more earnings to provide a barometer of corporate health and the threat of recession.
The Stoxx Europe 600 opened about 0.3% higher with miners and energy companies outperforming. S&P 500 futures rose around 0.2% while contracts for the Nasdaq 100 were marginally higher. Shares in Hong Kong and Shanghai rose before data Tuesday that’s projected to show China’s economic reopening gaining momentum.
Treasury yields ticked higher, with the rate-sensitive two-year hovering at around 4.1%. A gauge of market risk has dropped to the lowest in more than two months as volatility subsides across assets on easing concern over troubles in the banking sector.
A gauge of the dollar steadied. Hedge funds are betting the greenback’s longest stretch of weekly declines in almost three years is about to reverse after investors ramped up pricing for Fed rate cuts to extreme levels. Swaps traders upped bets for a rate increase by June and pricing suggests a quarter point hike has better than three-in-four odds for May.
Read more: Hedge Funds Go All In on Dollar for First Time in Over a Year
The more likely scenario for the US is “a relatively shallow recession at this point in time and that is going to put pressure on the dollar,” Sonja Marten, chief foreign exchange strategist at DZ Bank AG, said on Bloomberg Television.
Earnings will remain in focus, with reports expected from Charles Schwab Corp. and State Street Corp. Later in the week, Bank of America Corp. and Goldman Sachs Group Inc. are due to deliver results along with Netflix Inc. and Tesla Inc.
Investors will be looking for signs of health from Schwab, which has plunged nearly 40% this year as rising rates drove a spike in unrealized losses at the brokerage.
Financials outperformed last week with JPMorgan Chase & Co. and Citigroup Inc. pacing gains. That said, AllianceBernstein regards it as unlikely for earnings to turn strongly positive in the US by the fourth quarter.
“It’s much more likely that we’re going to hit an economic recession in the US over the next 12 months,” David Wong, senior investment strategist, said on Bloomberg Television.
Investors also await the release of the Fed’s Beige Book and commentary from officials including John Williams, Raphael Bostic, Loretta Mester and Lisa Cook. Markets were rattled last week after Fed Governor Christopher Waller said he favored more policy tightening in the central bank’s battle with inflation.
In commodities, crude was little changed Monday after logging its fourth week of gains amid signs of a tightening global market. Gold rose and Bitcoin fluctuated around the key $30,000 level.
Key events this week:
- ECB President Christine Lagarde speaks at the Council of Foreign Relations in New York, Monday
- Fed’s Thomas Barkin speaks before the Richmond Association for Business Economics, Monday
- China GDP, retail sales, industrial production, Tuesday
- US housing starts, Tuesday
- Goldman Sachs and Bank of America release first-quarter earnings, Tuesday
- Fed’s Michelle Bowman discusses digital currency, Tuesday
- Eurozone CPI, Wednesday
- Fed releases Beige Book, Wednesday
- Fed’s John Williams gives a speech, Wednesday
- Fed’s Austan Goolsbee is interviewed on NPR, Wednesday
- China loan prime rates, Thursday
- Eurozone consumer confidence, Thursday
- US initial jobless claims, existing home sales, index of leading economic indicators, Thursday
- ECB issues report on March policy meeting, Thursday
- Fed’s Christopher Waller speaks at cryptocurrency-focused event, Thursday
- Fed’s Patrick Harker speaks on “monetary policy and housing”, Thursday
- Fed’s Loretta Mester discusses the economic and policy outlook, Thursday
- Fed’s Raphael Bostic discusses regional and national economic conditions, Thursday
- Fed’s Michelle Bowman and Lorie Logan speak at event, Thursday
- PMIs for Eurozone, Friday
- Japan CPI, Friday
- Fed’s Lisa Cook discusses economic research at an event, Friday
Some of the main moves in the market:
Stocks
- The Stoxx Europe 600 rose 0.3% as of 8:05 a.m. London time
- S&P 500 futures rose 0.2%
- Nasdaq 100 futures rose 0.2%
- Futures on the Dow Jones Industrial Average rose 0.2%
- The MSCI Asia Pacific Index rose 0.3%
- The MSCI Emerging Markets Index rose 0.4%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was unchanged at $1.0992
- The Japanese yen fell 0.1% to 133.95 per dollar
- The offshore yuan was little changed at 6.8684 per dollar
- The British pound was little changed at $1.2420
Cryptocurrencies
- Bitcoin fell 1.4% to $29,928.08
- Ether fell 1.2% to $2,096.7
Bonds
- The yield on 10-year Treasuries was little changed at 3.52%
- Germany’s 10-year yield was little changed at 2.44%
- Britain’s 10-year yield declined one basis point to 3.66%
Commodities
- Brent crude was little changed
- Spot gold rose 0.4% to $2,013.15 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Vildana Hajric and Ritika Gupta.
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