(Bloomberg) — Stocks edged higher after last week’s rally amid optimism that central bank interest rates are near their peak. Crude oil rose 1%.
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European stocks rose 0.3% and U.S. stock futures were little changed after the S&P 500 rose about 6% last week. Crude oil prices rose after Saudi Arabia and Russia reaffirmed their commitment to maintain supply curbs of more than 1 million barrels per day until the end of the year.
The U.S. currency is on course for a fourth decline, with the dollar weakening against most of the Group of Ten countries, according to a Bloomberg index. Policy-sensitive US two-year bond yields rose 4 basis points after falling 15 basis points on Friday in a sign of a change in interest rate expectations.
Investors are ahead of expectations for next year’s Fed rate cuts, and are fully pricing in rate cuts through June, according to swap prices. The increase in dovish views was partly driven by a weaker-than-expected U.S. jobs report on Friday and a modest increase in the unemployment rate.
“Investors have a little more reason to be optimistic that the Fed will probably finish raising rates, but we shouldn’t let our guard down,” Vasu Menon, managing director of investment strategy at OCBC Bank Singapore, said on Bloomberg TV. “If the economy becomes more resilient and inflation proves more robust, bond yields could rise again.”
The Fed’s forecast for next year’s easing is at odds with the prospect of higher so-called long-term interest rates that policymakers have outlined in recent months, putting markets and Fed officials on a collision course.
Morgan Stanley’s Michael Wilson says last week’s market rally was more like a bear market rally than the start of a sustained bull market, especially given weak earnings revisions and macro indicators. . He said there was a lack of technical and fundamental support for the stock’s rise, and that the range of earnings revisions and earnings had deteriorated significantly over the past two months.
In Asia, MSCI’s benchmark stock index for the region rose for the fourth day in a row, closing at its highest level since September. South Korea’s Kospi rose as much as 4.4% on Sunday’s news that South Korea would ban short selling until the end of June. Chinese technology and real estate developers also rose.
Gold fell after rising on Friday on optimism that the Fed can avoid further monetary tightening.
This week’s main events:
Eurozone Services PMI, Monday
Australian interest rate decision Tuesday
China trade statistics Tuesday
US trade balance, Tuesday
Dallas Fed President Laurie Logan speaks on Tuesday
German CPI, Wednesday
Bank of England Governor Andrew Bailey speaks on Wednesday
China PPI, CPI, Thursday
U.S. new unemployment claims, Thursday
Federal Reserve Chairman Jerome Powell speaks on Thursday
US consumer confidence Friday
UK industrial production, GDP, Friday
The main movements in the market are:
stock
As of 8:02 a.m. London time, the Stoxx European 600 was up 0.3%.
S&P 500 futures rose 0.1%
Nasdaq 100 futures rose 0.1%
Dow Jones Industrial Average futures rose 0.1%.
MSCI Asia Pacific Index rose 1.9%
MSCI Emerging Markets Index rose 2.1%
currency
The Bloomberg Dollar Spot Index fell 0.1%.
The euro was almost unchanged at $1.0737.
The Japanese yen fell 0.2% to 149.67 yen to the dollar.
The offshore yuan was almost unchanged at 7.2869 yuan to the dollar.
The British pound was almost unchanged at $1.2383.
cryptocurrency
Bitcoin rose 0.7% to $34,938.1
Ether rose 0.6% to $1,880.64
bond
The 10-year Treasury yield rose 2 basis points to 4.59%.
Germany’s 10-year bond yield rose 4 basis points to 2.68%.
The UK 10-year bond yield rose 4 basis points to 4.33%.
merchandise
Brent crude rose 0.9% to $85.69 per barrel
Spot gold fell 0.4% to $1,983.84 an ounce.
This article was produced in partnership with Bloomberg Automation.
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