European equity futures rose alongside Asian shares after the House passed a deal to avert a US default, Federal Reserve officials hinted at a rate pause and China manufacturing expanded.
(Bloomberg) — European equity futures rose alongside Asian shares after the House passed a deal to avert a US default, Federal Reserve officials hinted at a rate pause and China manufacturing expanded.
Contracts for the region-wide Euro Stoxx 50 rose around 0.7% and US equity futures edged higher in signs of positive sentiment that lifted most major markets in Asia on Thursday. Gains for benchmarks in Japan, Australia and China placed a gauge of Asian shares on course for its best day in four weeks.
The advance in Chinese shares followed Caixin manufacturing data for May that showed an expansion in activity as the reading exceeded forecasts for a small contraction. The numbers followed official figures Wednesday that showed a further contraction in activity, weighing on the country’s equity markets.
For the Chinese economy “things are not getting worse outside of the growth momentum — but it’s not getting better,” Wendy Liu, chief Asia and China equity strategist for JPMorgan Chase & Co., said in an interview with Bloomberg Television. However, the economy will be “firmly in recovery in the second half,” she added.
The slight gain in S&P 500 futures came after a 0.6% loss for the benchmark on Wednesday that left the index clinging to a small gain for May, its third monthly advance. The Nasdaq 100 index fell 0.7%, weighed by a decline in Nvidia Corp. shares after a rapid rally that has nearly tripled the stock price this year.
The signs of optimism were helped along by comments from Fed officials who backed the possibility of holding rates unchanged the next meeting.
Fed Governor Philip Jefferson said the central bank is inclined to keep interest rates steady in June to assess the economic outlook. His remarks were echoed by Philadelphia Fed President Patrick Harker, who said, “I think we can take a bit of a skip for a meeting.”
The moves in European equity futures preceded a busy day of data releases that includes Eurozone manufacturing and inflation figures. European Central Bank president Christine Lagarde will also speak at a conference Thursday.
Corporate earnings were again in focus. Shares in Salesforce Inc. tumbled around 6% in after-hours trading following a dim outlook for sales while Hewlett Packard Enterprise Co. fell 7.1% Wednesday on slimmer revenue projections than anticipated.
Treasuries sold off, largely reversing a Wednesday rally. Australian bond yields were moderately higher as were those for New Zealand. The dollar was in a tight range against most major currencies.
Hopes for a Fed pause were partly pared back after the JOLTS jobs report for April showed more than 10 million openings, the highest in three months and above consensus estimates.
Passage of the deal struck by House Speaker Kevin McCarthy and President Joe Biden means the bill will be sent to the Senate days before the June 5 default deadline.
Elsewhere, West Texas Intermediate and Brent crude futures rose after two days of declines. Gold was little changed.
Key events this week:
- Eurozone HCOB Eurozone Manufacturing PMI, CPI, unemployment, Thursday
- US construction spending, initial jobless claims, ISM Manufacturing, Thursday
- ECB President Christine Lagarde speaks at conference, Thursday
- Fed’s Patrick Harker speaks at webinar, Thursday
- US unemployment, nonfarm payrolls, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures rose 0.1% as of 2:46 p.m. Tokyo time. The S&P 500 fell 0.6%
- Nasdaq 100 futures were little changed. The Nasdaq 100 fell 0.7%
- Japan’s Topix rose 0.9%
- Australia’s S&P/ASX 200 rose 0.3%
- Hong Kong’s Hang Seng rose 0.7%
- The Shanghai Composite rose 0.2%
- Euro Stoxx 50 futures rose 0.8%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro fell 0.1% to $1.0678
- The Japanese yen fell 0.2% to 139.68 per dollar
- The offshore yuan was little changed at 7.1182 per dollar
Cryptocurrencies
- Bitcoin fell 1% to $26,856.76
- Ether fell 0.5% to $1,857.11
Bonds
- The yield on 10-year Treasuries advanced three basis points to 3.67%
- Japan’s 10-year yield declined 1.5 basis points to 0.415%
- Australia’s 10-year yield advanced three basis points to 3.63%
Commodities
- West Texas Intermediate crude rose 0.4% to $68.36 a barrel
- Spot gold was little changed
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Joanna Ossinger.
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