Stocks rally for third day on hopes of soft landing in US as markets close

(Bloomberg) – Global stocks rose for a third day and the dollar slipped as better-than-expected US consumer confidence data and China’s renewed commitment to prioritize economic growth attracted more investors to stocks and other riskier assets.

Most read by Bloomberg

European stock indicator Stoxx 600 opened 0.4% higher, while US futures contracts moved higher after the S&P 500 index and the underlying Nasdaq 100 index gained 1.5% from Wednesday’s data showing US consumer confidence at an eight-month high.

“The resilience of the US economy therefore continues to amaze and the likelihood has become a mini step for a soft landing,” analysts at SEB told clients in Stockholm, noting that the recent sell-off has left global investors with plenty of “dry powder” to buy shares whenever opportunities present themselves.

They noted that the S&P 500 is down nearly 5% this month, in contrast to an average December 1.5% gain since 1950.

Read more: Hound stock bulls capture rare break in worst December since ’18

The latest gains came as trading begins to ease for the year, Federal Reserve speakers have fallen silent, and some positive data and earnings printouts have emerged. For now, the dust is also settling on the Bank of Japan’s sudden hawkish hike on Tuesday, when it agreed to double the ceiling on its 10-year commercial debt obligations.

Traders will likely continue to test the BOJ’s new 0.5% yield cap and the central bank conducted another debt-buying operation, pushing yields to around 0.385%. However, 10-year loan costs are on track for their biggest weekly increase since 2015.

Globally, yields on eurozone treasuries and bonds have declined, but fears remain that Japanese investors may now be persuaded to take home some of the trillions of dollars they have stashed away in foreign stocks and bonds. This could further raise global borrowing costs and drag down already cooling economic growth.

In the currency markets, the yen resumed its rally as the dollar slipped against a group of similar currencies.

Incremental shifts in capital flows and the interest rate have been key to the pair, noted Jefferies analyst Brad Bechtel, adding that “the Fed is close to finishing hiking, which means real rates in the The United States has stopped rising and will moderate a bit, easing the pressure on the dollar”.

Meanwhile, Asian stocks went on a five-day losing streak, with Hong Kong up more than 2%. As a surge in Covid infections in Shanghai and Beijing stoked worries about economic growth, a spate of comments from regulators indicated support is on the way for China’s broader economy and real estate developers. .

Oil prices were poised to end an extraordinarily volatile year slightly to the upside. West Texas Intermediate crude futures held above $78 a barrel, extending their gain into the fourth day, benefiting from lower US inventories and rising consumer confidence.

Key events this week:

  • US GDP, Initial Jobless Claims, Conf. Board Main Index, Thursday

  • US Consumer Income, New Home Sales, US Durable Goods, PCE Deflator, University of Michigan Consumer Sentiment, Friday

Some of the major moves in the markets:

Actions

  • S&P 500 futures were up 0.2% as of 3:40 am New York time

  • Nasdaq 100 futures rose 0.2%

  • Dow Jones Industrial Average futures rose 0.1%

  • The Stoxx Europe 600 is up 0.4%

  • The MSCI World Index is up 0.3%

Currencies

  • Bloomberg Dollar Spot Index fell 0.2%

  • The euro rose 0.3% to $1.0639

  • The British pound rose 0.3% to $1.2114

  • The Japanese yen rose 0.4% to 131.99 to the dollar

Cryptocurrencies

  • Bitcoin climbed 0.3% to $16,838.25

  • Ether rose 0.3% to $1,215.96

Bonds

  • The 10-year Treasury yield fell four basis points to 3.63%

  • German 10-year yield fell three basis points to 2.28%

  • UK 10-year yield fell three basis points to 3.54%

Goods

This story was produced with assistance from Bloomberg Automation.

–With assistance from Ishika Mookerjee and Mark Cranfield.

Most Read by Bloomberg Businessweek

©2022 Bloomberg LP

Leave a Reply

Your email address will not be published. Required fields are marked *