(Bloomberg) — European stock futures gained in line with Asian stocks, as risk appetite in financial markets got a fresh boost from China’s latest stimulus measures and upbeat momentum from the United States. The yen rose after the results of the Japanese elections.
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Euro Stoxx 50 contracts rose 0.2% along with Chinese stocks after officials pledged to increase fiscal support and stabilize the real estate sector to revive growth. US index futures softened on Friday after the S&P 500 hit its 42nd record close this year. The dollar rose, while US 10-year Treasury yields remained stable.
Stimulus in the world’s two largest economies has been a catalyst for markets this week, with China reducing the amount of cash banks must keep in reserve on Friday, ahead of a week-long holiday. The Federal Reserve’s preferred inflation gauge and a snapshot of consumer demand data, due out later on Friday, may provide additional signals on the path of U.S. interest rates.
The current Asian market is “entirely driven by China stimulus and, as a consequence, support for overall global growth,” said Matthew Haupt, portfolio manager at Wilson Asset Management International. “We are still waiting for more stimulus to give this rebound more duration.”
Elsewhere, the yen rallied against the dollar as Shigeru Ishiba won the election to lead Japan’s ruling party. Ishiba supports continued normalization of Bank of Japan policies with higher interest rates.
The People’s Bank of China on Tuesday unleashed one of the country’s boldest policy campaigns in decades, with Beijing launching a hefty stimulus package in an effort to shore up a slowing economy and investor confidence. The measures sent Chinese stocks soaring and the frenzy caused delays on the Shanghai stock exchange.
Holding the politburo meeting “in September instead of waiting until the normally scheduled meeting in December is in itself a sign that the authorities are willing to take more urgent steps to achieve the 5% growth target,” senior analysts said. , including Robert Carnell of ING Groep NV. in a note. “This week we saw a more aggressive than expected policy package from the People’s Bank of China and it is reasonable to expect other policies to follow soon.”
More optimism came from US economic data overnight, while Hong Kong’s tech index hit its highest level in more than a year. In China, bonds plunged as investors preferred risk assets over safe havens.
Read: David Tepper buys “everything” related to China in the face of Beijing’s relaxation
The revised data showed that the US economy is in better shape than initially expected, driven mainly by stronger consumer-driven growth fueled by strong incomes. A decline in U.S. jobless claims underscored the resilience of the labor market. But investors listening to Fed Chair Jerome Powell’s comments on Thursday did not get any details about the economic outlook or the direction of monetary policy.
In commodities, oil extended a sharp two-day decline, putting prices on track for a substantial weekly decline, amid prospects of increased supply from OPEC members Saudi Arabia and Libya. Copper rose back above $10,000 a ton and iron ore surpassed $100.
Gold was headed for a third weekly gain after setting successive record highs on optimism that the Federal Reserve will maintain an aggressive pace of interest rate cuts this year.
This week’s key events:
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Eurozone consumer confidence, Friday
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US PCE and Consumer Sentiment from University of Michigan, Friday
Some of the main movements in the markets:
Stocks
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S&P 500 futures fell 0.1% at 7:30 a.m. London time
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Nasdaq 100 futures fell 0.4%
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Dow Jones Industrial Average futures little changed
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The MSCI Asia Pacific index rose 1.1%
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The MSCI Emerging Markets Index rose 0.6%
Coins
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Bloomberg Dollar Spot Index Little Changed
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The euro was little changed at $1.1174
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The Japanese yen rose 0.8% to 143.60 per dollar
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The offshore yuan fell 0.3% to 6.9960 per dollar
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The pound fell 0.2% to $1.3390.
Cryptocurrencies
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Bitcoin rose 1.2% to $65,457.79
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Ether rose 1.1% to $2,661.48.
Captivity
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The yield on 10-year Treasury bonds barely changed, standing at 3.80%.
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The 10-year German bond yield barely changed, at 2.18%
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The British 10-year yield rose two basis points to 4.01%
Raw materials
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Brent crude rose 0.1% to $71.70 a barrel
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Spot gold fell 0.2% to $2,668.18 an ounce.
This story was produced with the help of Bloomberg Automation.
–With the help of Winnie Hsu.
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