Stocks rise ahead of big week for central banks: Markets summary

(Bloomberg) — European stocks rose after a strong Asian session, pointing to a risk-on mood ahead of major central bank decisions and big tech earnings this week. The yen also rose.

Most Read from Bloomberg

The Euro Stoxx 600 index rose 0.5%, while U.S. benchmark futures also rose. The bullish tone began earlier in Asia, where a major index posted its biggest gain in more than two weeks as investors increased bets on a rate cut by the Federal Reserve.

The 10-year Treasury yield fell two basis points to 4.17% while the dollar remained stable.

Monetary policy decisions in the US, Japan and the UK will take centre stage in the coming days. Investors will be looking for answers about the immediate path of interest rates, after markets were turned upside down by mixed signals from major economies.

Earnings at companies such as Apple, Amazon and Microsoft were also in focus this week after their shares fell sharply due to a disappointing start to the tech giants’ reporting season. In Europe, shares in Koninklijke Philips NV in Amsterdam rose after better-than-expected second-quarter earnings, while Heineken NV posted its biggest drop in a year after losing 874 million euros ($949 million).

The yen rose against all its G10 peers on Monday, helped by bets on a monetary tightening in Japan. The long-suffering currency has recovered some of its losses in recent sessions and is now on track for its best monthly performance against the dollar this year.

“Watch central bank policy decisions, particularly the FOMC which is likely to remain steady but hint at a rate cut soon,” analysts at Overseas China Banking Corp. wrote. The Bank of Japan is likely to announce quantitative easing, while the Bank of England is expected to enact “its first rate cut since 2020.”

The Fed is likely to signal its plans to cut interest rates in September at the conclusion of its meeting on Wednesday, according to economists surveyed by Bloomberg News, a move they say would see cuts begin every quarter through 2025. Financial markets are fully pricing in a September move, with a chance of two more by the end of the year, according to swaps data compiled by Bloomberg.

“While the July FOMC meeting is likely too early to start cutting, it is not too early to start preparing for a September rate cut,” Stephen Gallagher, an economist at Societe Generale, wrote in a note to clients.

The story continues

Just hours before the Fed’s decision, the Bank of Japan is expected to release details of its plans to reduce monthly bond purchases at the end of its two-day policy meeting on Wednesday, while most economists also see the risk of a rate hike.

As for the Bank of England, most economists expect it to cut interest rates for the first time since the start of the pandemic on August 1, although a close vote is expected.

Bitcoin surged to a six-week high after Donald Trump said he would make the United States the “cryptocurrency capital” of the world if he returned to the White House.

In commodities, gold is expected to be the best hedge in the event of a Trump re-election. Oil prices rose from their lowest in nearly six weeks after positive Chinese economic data helped ease concerns about demand in the world’s largest importer, ahead of an OPEC+ monitoring meeting this week.

Main events this week:

• McDonald’s, Monday

• Microsoft Earnings Tuesday

• European inflation and growth data, Tuesday

• Australian Consumer Price Index, Wednesday

• Bank of Japan Monetary Policy Decision, Wednesday

• Meta Platforms Earnings, Wednesday

• Fed rate decision and Fed Chair Jerome Powell press conference, Wednesday

• Bank of England sets official interest rate on Thursday

• Amazon, Apple Earnings Thursday

• The US is set to increase tariffs on a range of Chinese imports on Thursday, including electric cars, batteries, chips and medical products.

• South Korea’s consumer price index, Friday

• U.S. Employment, Factory Orders on Friday

Some key movements in the markets:

Stores

• The Stoxx Europe 600 index was up 0.5% by 8:03 a.m. London time.

• S&P 500 futures rose 0.5%.

• Nasdaq 100 futures rose 0.7%.

• Dow Jones Industrial Average futures rose 0.4%.

• MSCI Asia Pacific Index rose 1.3%

• The MSCI Emerging Markets Index rose 0.7%.

Currencies

• The Bloomberg Dollar Index was little changed.

• The euro was little changed at $1.0858.

• The Japanese yen rose 0.2% to 153.42 yen per dollar.

• The offshore yuan was little changed at 7.2628 against the dollar.

• The pound was little changed at $1.2866.

Cryptocurrencies

• Bitcoin rose 2.3% to $69,568.63

• Ether price rose 3.6% to $3,376.38

Bonds

• The yield on the 10-year US Treasury note fell 2 basis points to 4.17%.

• The yield on the German 10-year bond fell by two basis points to 2.39%.

• The yield on the 10-year British bond fell three basis points to 4.07%.

Goods

• Brent crude rose 0.5% to $81.50 a barrel.

• Spot gold rose 0.1 percent to $2,390.31 an ounce.

This story was produced with the help of Bloomberg Automation.

Most Read from Bloomberg Businessweek

©2024 Bloomberg LP