(Bloomberg) – European stocks and US stock futures followed the rise of Asian stocks on Tuesday as investors waited for the next batch of data and speeches from policymakers for clues on the outlook for the economy and interest rates.
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The Stoxx Europe 600 index was on course for an increase for the first time in seven days, with miners leading the rise while iron ore and copper rallied on hopes China will announce more stimulus to its struggling economy. Prosus NV rose more than 7% after receiving regulatory approval to end cross-shareholding structure with Naspers Ltd. was received.
The S&P 500 and Nasdaq 100 futures rose about 0.3%, overcoming Monday’s weakness, when the Nasdaq fell 1.4% after experiencing its worst week since March on fears that the Federal Reserve could push the US economy into recession. An indicator of dollar strength fell and the offshore yuan rallied after China set its daily reference rate for the managed currency at stronger-than-expected levels for a second day. US government bonds were stable.
Remarks by European Central Bank President Christine Lagarde at a policy forum in Sintra, Portugal, come under scrutiny from traders growing concerned central banks will continue to hike rates and risk sending fragile economies into reverse gear . Their counterparts from the US, Japan and the UK will be speaking at the same forum later this week. US data on office equipment orders, home sales and consumer confidence on Tuesday will complete the picture.
Traders have finally given up their bets that the Fed will cut rates this year after Chairman Jerome Powell warned last week that the US might need another rate hike or two in 2023.
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“I’m not sure we’ve felt the full impact of the whole inflation cycle,” Nancy Daoud, private wealth advisor at Ameriprise Financial Services, told Bloomberg Television. “Those rate hikes are very, very likely in July and early fall.”
An indicator for Asian stocks was on course for its first rise in seven days, buoyed by a rally in Hong Kong-listed technology stocks as the People’s Bank of China tightened its support for the yuan.
The yen, meanwhile, continued to hover around 143.50 against the dollar, a level that has caused concern in Tokyo. Japan extended the tenure of its chief currency official, Masato Kanda, by another year, underscoring its determination to contain the currency’s weakness.
Back in Asia, a positive sign for US-China relations came from a report that US Treasury Secretary Janet Yellen plans to visit Beijing in early July for the first high-level economic talks with her new Chinese counterpart, He Lifeng. Still, the Biden administration expects to have an executive order in place as early as July that would regulate and possibly ban some US investments in China.
“There is a lot to discover when it comes to the Chinese markets and global investors should take another look,” Geoffrey Lunt, head of Asia investment specialists at HSBC Asset Management, told Bloomberg Television. “In the next one, three, five years, many investors will make a lot of money from Chinese stocks.”
Oil prices edged up Tuesday after the choppy session following the armed insurgency in Russia, a key OPEC+ producer. Gold also rose.
In a late-night televised address, Putin condemned the leaders of the Wagner mercenary group as traitors to Russia. The comments did little to clear up the mystery surrounding the weekend’s events or the fate of Wagner boss Yevgeny Prigozhin, who the Kremlin said had agreed to travel to Belarus and avoid prosecution.
Important events this week:
US New Home Sales, Durables, Conference Board Consumer Confidence, Tuesday
US Wholesale Inventories, Goods Trade Balance, Wednesday
The Fed will present the results of its annual stress test for the banking industry on Wednesday
Policy panel with ECB Chair Christine Lagarde, Fed Chair Jerome Powell, BOJ Chair Kazuo Ueda and BOE Chair Andrew Bailey speak Wednesday
Eurozone Economic Confidence, Consumer Confidence, Thursday
US GDP, Initial Jobless Claims, Thursday
Atlanta Fed President Rafael Bostic speaks Thursday
China Manufacturing PMI, Non-manufacturing PMI, Balance of Payments, Friday
US Personal Income and Expenditure, Consumer Sentiment at University of Michigan, Friday
Some of the key movements in the markets:
Shares
The Stoxx Europe 600 was up 0.5% at 8:14am London time
S&P 500 futures up 0.4%
Nasdaq 100 futures up 0.4%
Futures on the Dow Jones Industrial Average rose 0.3%
MSCI Asia Pacific Index up 0.5%
MSCI Emerging Markets Index up 0.7%
currencies
The Bloomberg Dollar Spot Index fell 0.2%
The euro rose 0.3% to $1.0939
The Japanese yen was little changed at 143.49 per dollar
The offshore yuan rose 0.3% to 7.2181 per dollar
The British pound rose 0.3% to $1.2747
cryptocurrencies
Bitcoin rose 0.6% to $30,359.13
Ether was up 1.2% to $1,873.39
Bind
The 10-year government bond yield rose two basis points to 3.74%
The 10-year German government bond yield rose two basis points to 2.33%
The 10-year UK government bond yield rose one basis point to 4.32%
raw materials
Brent crude rose 0.7% to $74.67 a barrel
Spot gold rose 0.3% to $1,928.29 an ounce
This story was created with the support of Bloomberg Automation.
– With support from Jason Scott and Abhishek Vishnoi.
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