(Bloomberg) — European stocks rose, tracking a record close for the S&P 500, on optimism about U.S. interest rate cuts after Federal Reserve Chair Jerome Powell said inflation is returning to a downward path.
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Shares in most European industrial groups were trading in the green as the regional Stoxx 600 index rose 0.5%, led by mining and technology companies. Attention remains focused on politics ahead of the UK election. In France, the benchmark CAC 40 index rose as parties opposed to the National Rally try to prevent Marine Le Pen’s far-right group from securing an absolute majority in the next round of legislative voting.
U.S. stock futures were steady ahead of a shortened session on Wall Street due to the July 4 holiday. The S&P 500 closed above 5,500 for the first time on Tuesday, its 32nd record this year. The Nasdaq 100 also hit a record high with its first close above 20,000.
U.S. stocks continue to defy the doomsayers amid strong corporate earnings, AI mania and expectations that interest rates will fall, adding more than $16 trillion to the value of the S&P 500 since a closing low in October 2022. The lack of a significant pullback has given bulls conviction that the rally is sustainable.
The new record closes for the S&P 500 and Nasdaq “could also be taken as another victory given the psychological importance of ’round numbers,'” said Chris Weston, head of research at Pepperstone Group in Melbourne.
Investors are looking to Wednesday’s release of initial U.S. jobless claims and ADP employment data for further clues on the outlook for monetary policy. Federal Reserve Chairman Powell acknowledged that the central bank has made “quite a bit of progress” in lowering inflation, but stressed that officials need more evidence before cutting interest rates.
Markets are also bracing for the all-important U.S. payrolls report on Friday. Economists expect the report to show that employers added about 190,000 workers in June and that the unemployment rate likely held steady at 4%.
Asian stocks were on track for their longest winning streak since May. Japanese shares rose, with benchmark indexes now less than 1% from their record highs. In China, services activity expanded at the slowest pace in eight months in June, a private gauge showed, a slowdown that may add to concerns about the economy’s outlook. Hong Kong stocks rose while those on the mainland fell.
Elsewhere, Australian three-year bond yields extended their gains after better-than-expected retail sales data bolstered the case for a rate hike.
Elsewhere, oil rose to a near two-month high, while the Bloomberg Dollar Spot Index and Treasury yields were virtually unchanged.
Key events this week:
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S&P Global Eurozone Services PMI and PPI, Wednesday
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US Federal Reserve Minutes, ADP Employment, ISM Services, Factory Orders, Initial Jobless Claims, Durable Goods, Wednesday
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Fed’s John Williams speaks Wednesday
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UK General Election, Thursday
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Thursday, holiday for the United States Independence Day
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Eurozone retail sales, Friday
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US employment report, Friday
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Fed’s John Williams speaks on Friday
Some of the main movements in the markets:
Stocks
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The Stoxx Europe 600 was up 0.5% as of 8:22 a.m. London time.
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S&P 500 futures were little changed
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Nasdaq 100 futures were little changed
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Dow Jones Industrial Average futures were little changed
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The MSCI Asia Pacific index rose 0.7%
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The MSCI emerging markets index rose 0.8%
Coins
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Bloomberg Dollar Spot Index little changed
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The euro remained virtually unchanged at $1.0753.
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The Japanese yen fell 0.3 percent to 161.86 per dollar.
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The offshore yuan was unchanged at 7.3074 per dollar.
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The pound was little changed at $1.2694.
CRYPTOCURRENCIES
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Bitcoin fell 1.6% to $60,922.44
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Ether fell 1.7% to $3,357.45
Captivity
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The yield on the 10-year Treasury note was virtually unchanged at 4.43%.
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The yield on 10-year German bonds rose two basis points to 2.62%.
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The yield on 10-year British bonds fell two basis points to 4.22%.
Raw Materials
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Brent crude rose 0.5% to $86.67 a barrel
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Spot gold rose 0.6% to $2,343.79 an ounce
This story was produced with assistance from Bloomberg Automation.
–With the assistance of Rob Verdonck.
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