European stock futures edged higher after the S&P 500 closed at a new record Friday, amid optimism about possible interest rate cuts from the Federal Reserve. Trade levels in Asia were moderated by the closure of parts of the markets during the Lunar New Year holidays.
Contracts for the Euro Stoxx 50 index show the benchmark index is poised to extend its advance after ending Friday with a third weekly gain. The S&P 500 closed above 5,000 for the first time thanks to a new rally by big tech companies.
CONTINUE READING BELOW
Stocks in Australia, New Zealand, India and the Philippines fell due to a lack of leaders in the region. Markets in Japan, China, Hong Kong, Singapore, Taiwan and South Korea were all closed for the holiday.
U.S. futures were little changed as investors braced for U.S. inflation figures due Tuesday, which will help identify the Fed’s path forward.
The yen held near a two-month low hit Friday following comments from central bankers that the Bank of Japan would take its time raising rates. The Japanese currency has weakened against all of its Group of 10 peers this year.
Australian and New Zealand bonds fell, roughly mirroring the decline in Treasuries on Friday. There was no trading of Treasuries in Asia due to the Japanese holiday.
Bitcoin was little changed after rising slightly toward $49,000 — a level last seen in mid-January when a number of U.S. spot exchange-traded funds began trading.
The annual inflation rate in the United States is expected to have fallen to 2.9% in January from 3.4% the previous month, according to consensus estimates from economists surveyed by Bloomberg. This would be the first reading below 3% since March 2021.
“High inflation has rarely been brought under control without precipitating a recession,” Ed Yardeni, president of Yardeni Research, wrote in a research note. “The Fed brought inflation back toward its 2% target, while allowing the U.S. economy to soar, avoiding a hard landing.”
The S&P 500 rose 0.6% on Friday to set a new record, while the Nasdaq 100 jumped 1%. Gains were driven by technology stocks and positive fourth-quarter earnings. Four out of five companies reporting results so far have beaten expectations, improving the outlook for corporate profits.
The advance in U.S. stocks came even as traders pushed back against expectations that the Fed would ease policy after relatively hawkish comments from central bankers and economic data showing there was no immediate need to reduce interest rates.
CONTINUE READING BELOW
Swap market prices show that investors anticipate a 15% Fed cut in March, up from 65% a month ago. Traders now expect four rate cuts of 25 basis points in 2024, compared to seven planned at the end of last year.
In the commodities sector, oil prices fell following last week’s advance. Iran’s foreign minister says the war in Gaza could move closer to a diplomatic solution.
In Asia, data to be released on Monday includes reports on inflation and industrial production in India.
Key events this week:
- Indian CPI, Monday
- Minneapolis Fed President Neel Kashkari, Fed Governor Michelle Bowman and Fed Chairman Tom Barkin will speak Monday.
- ECB Executive Board Member Piero Cipollone and Chief Economist Philip Lane to Speak on Monday
- US CPI, Tuesday
- Unemployment in the United Kingdom, Tuesday
- Producer prices in Japan, Tuesday
- British inflation, Wednesday
- Eurozone GDP, industrial production, Wednesday
- Presidential election in Indonesia, Wednesday
- Bank of England Governor Andrew Bailey speaks on Wednesday
- ECB Governing Council Member Boris Vujcic and Vice-President Luis de Guindos speak
- Chicago Fed President Austan Goolsbee speaks Wednesday
- Jobs in Australia, Thursday
- GDP of Japan, Thursday
- British GDP, Thursday
- First unemployment claims in the United States and retail sales, Thursday
- Philippine Central Bank Meeting on Interest Rates Thursday
- ECB President Christine Lagarde speaks on Thursday
- Fed Governor Christopher Waller speaks Thursday
- Bank of England policy chiefs Catherine Mann and Megan Green to speak on Thursday
- Housing starts in the United States, producer prices, Friday
- San Francisco Fed President Mary Daly and Fed Vice Chairman for Supervision Michael Barr will speak Friday.
Some of the main market movements:
- S&P 500 futures were little changed as of 3:32 p.m. Tokyo time
- Nasdaq 100 futures little changed
- Euro Stoxx 50 futures rose 0.3%
- Bloomberg Dollar Spot Index little changed
- The euro was little changed at $1.0793
- The Japanese yen was little changed at 149.20 per dollar.
- The offshore yuan was little changed at 7.2217 per dollar.
- Bitcoin little changed at $48,138.01
- Ether fell 0.2% to $2,499.03
- The Australian 10-year yield rose three basis points to 4.16%
- West Texas Intermediate crude fell 0.4% to $76.57 a barrel
- Spot gold little changed
This story was produced with the help of Bloomberg Automation.
© 2024 Bloomberg