A gauge of global stocks headed for its highest close in 10 weeks on speculation the Federal Reserve and other central banks are nearing the end of their hiking cycles. The dollar extended declines.
(Bloomberg) — A gauge of global stocks headed for its highest close in 10 weeks on speculation the Federal Reserve and other central banks are nearing the end of their hiking cycles. The dollar extended declines.
MSCI Inc.’s World Index rose for a second day as equities advanced from Japan to Australia, following a rally in US stocks on Thursday.
Europe equity futures also pointed to gains, while those for US shares were little changed. The S&P 500 climbed the most this month on Thursday and the tech-heavy Nasdaq had the best day since the middle of March following weaker-than-expected US factory-gate data.
In a further sign rates are peaking around the world, Singapore’s central bank kept its policy settings unchanged after five tightening moves. The swap market is still leaning toward a quarter-point Fed hike in May with the central bank then expected to pause over the summer and gradually cut in the next months.
“To the extent that markets now are genuinely expecting rate cuts at the end of this year, there is a prospect that we see a little bit further in this equity rally in the near term,” Isaac Poole, chief investment officer at Oreana Financial Services, said on Bloomberg Television.
A Bloomberg gauge of the dollar dropped to the lowest since February as the US currency weakened against all but one of its Group-of-10 peers. The euro climbed to the strongest in a year on speculation the Fed has just one rate hike left in May. South Korea’s won led gains in Asian currencies.
“US dollar weakness is looking a bit stretched at the moment given the market still looks for Fed rate cuts later this year and inflation is likely to remain persistent,” said David Forrester, a senior strategist at Credit Agricole CIB in Singapore. “Signs of the US economy looking resilient would see the USD bounce, so US retail sales and University of Michigan consumer sentiment data later today will be important.”
Treasuries steadied after falling on Thursday amid improved risk sentiment. The policy-sensitive two-year yield held within a narrow range around 3.97%.
US rates have begun a process of consolidation that may stretch through next week and into the pre-Federal Open Market Committee period of radio silence, BMO strategists Ian Lyngen and Benjamin Jeffery wrote in a note. “Investors will remain wary of any indication that the regional banking turmoil has translated into materially tighter lending standards throughout the system.”
As US banks kick off the earnings season later on Friday, “even confirmation that lenders are taking a more conservative approach will offer no ‘obvious’ market implications in light of the fact 10-year yields are already trading in a sub-3.50% range,” they wrote.
Meanwhile, China’s largest banks are planning at least 40 billion yuan ($5.9 billion) of bond sales, kicking off a major funding push to comply with global capital requirements by early 2025.
In commodities, oil headed for a fourth week of gains amid signs of a tightening global market and a weaker dollar. Gold was set for a second weekly increase.
Key events this week:
- 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 market moves:
Stocks
- S&P 500 futures were little changed as of 6:30 a.m. London time. The S&P 500 rose 1.3%
- Nasdaq 100 futures fell 0.1%. The Nasdaq 100 rose 2%
- Euro Stoxx 50 futures rose 0.3%
- Japan’s Topix index rose 0.5%
- Hong Kong’s Hang Seng Index was little changed
- China’s Shanghai Composite Index rose 0.4%
- Australia’s S&P/ASX 200 Index rose 0.5%
Currencies
- The Bloomberg Dollar Spot Index fell 0.2%
- The euro rose 0.2% to $1.1070
- The Japanese yen was little changed at 132.49 per dollar
- The offshore yuan rose 0.5% to 6.8397 per dollar
- The Australian dollar was little changed at $0.6779
- The British pound rose 0.1% to $1.2538
Cryptocurrencies
- Bitcoin rose 1.7% to $30,791.23
- Ether rose 5.5% to $2,118.96
Bonds
- The yield on 10-year Treasuries declined one basis point to 3.44%
- Australia’s 10-year yield advanced five basis points to 3.32%
Commodities
- West Texas Intermediate crude rose 0.4% to $82.50 a barrel
- Spot gold was little changed
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Stephen Kirkland and Tania Chen.
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