Stocks rise with US futures ahead of price data: Markets close

(Bloomberg) — European shares rose, following gains in Asia, as investors waited for U.S. price data that could provide guidance on the Federal Reserve’s policy path.

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The Stoxx Europe 600 rose 0.3% on the open day, led by financial services and banks. U.S. stock index futures advanced after a flat day on Wall Street. Asian shares rose, paring losses from last week’s rout, supported by a rally in Japan.

The British pound gained after data showed British unemployment fell unexpectedly in the second quarter, raising doubts about the pace of policy easing by the Bank of England. US government bonds and the dollar remained stable.

After last week’s turmoil, markets are focused on Wednesday’s U.S. Consumer Price Index to see whether the Fed will have a freer or more limited hand in securing a soft landing for the economy. The recent rally in crude oil prices also puts the spotlight on producer price data later Tuesday as an indicator of inflation risk in the pipeline.

“The first wave of carry trading in the yen should now be complete, and investor focus is now on US inflation and retail sales data to gauge the likelihood of a soft landing,” said Linda Lam, head of equity advisory North -Asia at Union Bancaire Privee. . “Risk sentiment is recovering.”

Japanese shares rose after a holiday as a weaker yen was seen providing support to exporters. The MSCI Asia Pacific index rose as much as 1%. That erased losses from last week’s slump, when a risk-off move sent indexes around the world plunging and the U.S. VIX volatility index at one point rose above 65, compared with a lifetime average of around 19. 5.

“The market’s reaction to last week’s VIX spike reflects a reassessment of positioning and not simply unwinding US data points or yen carries,” said Billy Leung, investment strategist at Global X Management in Sydney. “However, it is critical to be cautious when reading short-term moves in Asia given signs of foreign outflows and low liquidity.”

Brent crude remained near the $82 level it reached on Monday as the US sees an Iranian attack on Israel increasingly likely. Israel’s sovereign debt was downgraded by one notch by Fitch Ratings, which maintained a negative outlook on credits as the ongoing military conflict weighs on the country’s public finances. Government bonds held on to Monday’s gains.

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Elsewhere in Asia, regulators have ordered commercial banks in China’s Jiangxi province not to complete their purchases of government bonds. They have taken some of the most extreme measures yet to cool a market rally that has alarmed Beijing.

The crackdown is beginning to take its toll on corporate bond markets, as the average yield on AA-rated one-year yuan corporate bonds – generally considered junk debt in the domestic market – rose by the biggest since December 2022.

Main events this week:

• Germany ZEW survey expectations, Tuesday

• US PPI, Tuesday

• Raphael Bostic of the Fed will speak on Tuesday

• Eurozone GDP, industrial production, Wednesday

• US CPI, Wednesday

• House prices in China, retail sales, industrial production, Thursday

• US initial unemployment claims, retail sales, industrial production, Thursday

• Alberto Musalem and Patrick Harker of the Fed will speak on Thursday

• Start of the US housing market, consumer confidence from the University of Michigan, Friday

• Fed CEO Austan Goolsbee speaks Friday

Some of the major moves in the markets:

Stocks

• The Stoxx Europe 600 rose 0.3% as of 8:18 a.m. London time

• S&P 500 futures rose 0.5%

• Nasdaq 100 futures rose 0.8%

• Futures on the Dow Jones Industrial Average rose 0.3%

• The MSCI Asia Pacific Index rose 1.1%

• The MSCI Emerging Markets Index was little changed

Currencies

• The Bloomberg Dollar Spot Index was little changed

• The euro was little changed at $1.0929

• The Japanese yen fell 0.5% to 147.90 per dollar

• The offshore yuan was little changed at 7.1760 per dollar

• The British pound rose 0.2% to $1.2800

Cryptocurrencies

• Bitcoin rose 1% to $59,433.28

• Ether fell 0.8% to $2,659.39

Bonds

• The yield on ten-year government bonds rose by one basis point to 3.91%

• The German ten-year yield remained little changed at 2.23%

• The British ten-year yield rose by one basis point to 3.93%

Raw materials

• Brent crude fell 0.5% to $81.91 per barrel

• Gold fell 0.4% to $2,462.42 an ounce

This story was produced with the help of Bloomberg Automation.

–With help from Jason Scott.

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