(Bloomberg) — European stocks hovered near their highest since January 2022 and U.S. stock futures edged higher as investors braced for a Federal Reserve interest rate cut next year. Gold prices were trading near record highs set earlier this month.
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The Stoxx Europe 600 index is little changed and is expected to rise about 13% this year after thin holiday trading erased early gains. Oil majors fell as crude oil prices fell. Nasdaq 100 futures rose 0.2% and the S&P 500 was volatile following Wall Street’s gains on Wednesday.
Bonds fell after Wednesday’s strong rally, with yields on five- to 30-year government bonds falling by at least 10 basis points and Germany’s 10-year yield hitting its lowest level in 2023. The rally brought one of the global bond market benchmarks to the top of a record two-month rally.
Vishnu Varasan, head of economics and strategy at Singapore’s Mizuho Bank, said hopes for aggressive policy easing were being brought forward. “The strong rally in the bond market has actually increased total returns for investors,” he said. “We feel that the market is signaling that we are once again halfway down the path to accommodative monetary policy.” said.
Asian markets’ gains were driven by a rotation into some of 2023’s worst-performing sectors and led by Chinese stocks, which had their best day in four months. Stock prices also rose in Hong Kong, India and Australia.
Global stock indexes have risen more than 15% from October lows and are on pace for their highest close since February 2022, reflecting traders’ optimism about interest rate cuts next year. Traders are increasingly betting the Fed will cut interest rates as early as March, according to Fed swap pricing. Jobs data due later Thursday could provide further clarity on the outlook for the economy and interest rates.
Strong demand for five-year Treasury notes on Wednesday, following strong demand for the two-year bond auction the previous day, helped the bond rally. The strong interest in bonds is a sign that investors are looking to secure attractive yields ahead of an expected Fed rate cut. The dollar weakened against all Group of Ten (G10) members, with the dollar index recording its fifth straight day of declines.
In Asia, the yen rose for the second day in a row as Bank of Japan Governor Kazuo Ueda continued preparations for the first domestic interest rate hike since 2007.
China’s CSI 300 index is heading for its first weekly gain since early November, with technology and renewable energy stocks contributing the most to Thursday’s gains.
Oil fell amid signs of U.S. stockpiling buildup. Bitcoin edged higher, trading above $43,000 amid fresh speculation that the U.S. Securities and Exchange Commission is close to approving an exchange-traded fund that invests directly in the largest token.
This week’s main events:
U.S. wholesale inventories, new unemployment claims, Thursday
House prices across the UK, Friday
The main movements in the market are:
The Stoxx European 600 remained unchanged as of 9:20 a.m. London time.
S&P500 futures little changed
Nasdaq 100 futures rose 0.2%
Dow Jones Industrial Average futures fell 0.1%.
MSCI Asia Pacific Index rose 1.2%
MSCI Emerging Markets Index rose 1.2%
The Bloomberg Dollar Spot Index fell 0.2%.
The euro rose 0.1% to $1.1117.
The Japanese yen rose 0.6% to 140.93 yen to the dollar.
The offshore yuan rose 0.5% to 7.1166 yuan to the dollar.
The British pound was almost unchanged at $1.2794.
Bitcoin fell 0.9% to $42,995.95.
Ether rose 1.2% to $2,388.21
The 10-year Treasury yield rose 3 basis points to 3.82%.
Germany’s 10-year bond yield rose 3 basis points to 1.92%.
The UK 10-year bond yield rose 4 basis points to 3.48%.
Brent crude oil fell 0.9% to $78.95 per barrel.
Spot gold fell 0.2% to $2,073.51 an ounce.
This article was produced in partnership with Bloomberg Automation.
—With contributions from Chiranjivi Chakraborty and Richard Henderson.
(In an earlier version, the first paragraph was corrected to indicate that gold was trading at near-record prices)
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