(Bloomberg) — Stocks extended gains as investors welcomed colder-than-expected inflation readings in the U.S. and U.K. as evidence that central banks may have ended their aggressive rate hikes. interest rates.
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Europe’s Stoxx 600 index rose 0.5% and S&P 500 contracts added 0.3%. 10-year Treasury yields stabilized, while the dollar was little changed after yesterday’s sharp decline.
Markets now await Wednesday’s data on U.S. retail sales and producer prices, as well as results from Target Corp., for further confirmation that an economic slowdown will allow the Federal Reserve to stop tightening monetary policy. . Fed swaps indicate the odds of another hike have fallen to near zero, and the market is pricing in a 50 basis point rate cut by July.
“If the Fed finishes raising interest rates, there is a sense of relief that this big hurdle to market appreciation is being removed,” said Matt Stucky, chief equity portfolio manager at Northwestern Mutual Wealth Management Co.
However, if upcoming data, including retail sales, indicate only a gradual economic slowdown, “what we will likely see is the Federal Reserve continuing to pause,” he added.
London’s FTSE 100 index gained 0.8% and the pound fell after UK inflation slowed more than expected, a similar result to Tuesday’s reading of US prices. That news strengthened optimism that the Bank of England is also done raising rates.
Infineon Technologies AG gained about 7% after the German chipmaker forecast higher sales, helped by the strength of its automotive business. French train maker Alstom SA plunged 17% after announcing a plan to cut jobs and sell assets.
In Asia, the MSCI gauge of the region’s stocks rose more than 2% as China stepped up economic support. The People’s Bank of China injected the largest amount of cash into the banking system since 2016, offering 1.45 trillion yuan ($200 billion) of cash through its medium-term credit line.
Iron ore futures in Singapore touched $130 a tonne for the first time since March on improving steel demand prospects in China. That boosted European mining stocks, sending the industry up 2% to the biggest advance on the Stoxx 600.
This week’s key events:
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US Retail Sales, Business Inventories, PPI and Empire Manufacturing, Wednesday
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Target earnings, Wednesday
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New home prices in China, Thursday
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US Initial Jobless Claims and Industrial Production, Thursday
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Walmart earnings, Thursday
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US President Joe Biden and Chinese President Xi Jinping are expected to speak at the APEC leaders’ summit on Thursday.
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Cleveland Fed President Loretta Mester, New York Fed President John Williams and Fed Vice Chair for Supervision Michael Barr speak Thursday.
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Bank of England Deputy Governor Dave Ramsden and ECB President Christine Lagarde speak at an event on Thursday.
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US Housing Starts, Friday
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The US Congress faces a midnight deadline to approve a federal spending measure on Friday.
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ECB President Christine Lagarde speaks on Friday
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Chicago Fed President Austan Goolsbee, Boston Fed President Susan Collins and San Francisco Fed President Mary Daly speak Friday.
Some of the main movements in the markets:
Stocks
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S&P 500 futures were up 0.3% at 5:54 a.m. New York time
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Nasdaq 100 futures rose 0.5%
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Dow Jones Industrial Average futures rose 0.2%
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The Stoxx Europe 600 rose 0.6%
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The MSCI World index rose 0.5%
Coins
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Bloomberg Dollar Spot Index Little Changed
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The euro fell 0.2% to $1.0857
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The pound fell 0.3% to $1.2461.
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The Japanese yen barely changed at 150.46 per dollar.
CRYPTOCURRENCIES
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Bitcoin rose 0.8% to $35,875.96
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Ether rose 0.3% to $1,988.71.
Captivity
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The yield on 10-year Treasury bonds rose two basis points to 4.47%
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The yield on the 10-year German bond barely changed, at 2.60%
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The British 10-year yield rose two basis points to 4.17%
Raw Materials
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West Texas Intermediate crude fell 0.4% to $77.89 a barrel
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Spot gold rose 0.5% to $1,973.14 an ounce.
This story was produced with the help of Bloomberg Automation.
–With the help of Tassia Sipahutar and Winnie Hsu.
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