US Stock Futures Pause Before PCE Data; Yen Jumps: Markets Wrap

(Bloomberg) — US futures edged lower at the end of a week that saw benchmarks on Wall Street and in Europe hit records amid optimism over central bank easing and stimulus from China. The yen swung to gains following Japanese election results.

Contracts on the S&P 500 slipped after the underlying index hit its 42nd closing record this year. Nasdaq 100 futures were down 0.2%, with chipmaker Nvidia Corp. dropping more than 1% in premarket trading. The dollar and 10-year US Treasury yields traded little changed. 

Traders are looking out for the Federal Reserve’s preferred inflation indicator later Friday for clues on the trajectory of interest-rates after a robust data revision. China’s daily stimulus announcements, coupled with mounting bets for more interest-rate cuts from the Fed and the European Central Bank have stoked risk appetite across markets this week. 

“The data’s saying soft landing — you have to respect the data — but the forward looking indicators are flagging warning signs,” said Andrew Pease, global head of investment strategy at Russell Investments Ltd. “The descent into a soft landing will always look the same as the start of a recession. And you won’t know till after you’ve got there.” 

Japan’s yen rebounded, climbing 1% against the dollar as Shigeru Ishiba won the vote for leadership of the nation’s ruling party. Ishiba, a party veteran who has served in several senior roles including defense minister, is seen as supportive of the Bank of Japan’s plan to gradually hike rates.

Europe’s Stoxx 600 index climbed, on track for its best weekly performance since mid-August after the pledges of economic support by China’s leaders drove up luxury and mining stocks. 

The region’s bond yields and the euro fell, as inflation figures in both Spain and France came in lower than anticipated. That fueled expectations of more decisive rate cuts by the ECB. 

European Bond Rally Builds Momentum as Bets on October Cut Grow

“In the next 12 months we still see upside to the European and the US markets,” Nataliia Lipikhina, JPMorgan Private Bank’s head of EMEA equity strategy, told Bloomberg TV. “Central banks are cutting, but at the same time fundamentals remain very strong.”

Trading Frenzy

In China, the CSI 300 Index rallied 4.5%, wrapping up its best week since 2008. The People’s Bank of China unleashed one of the country’s most daring policy campaigns in decades, with Beijing rolling out a strong stimulus package in a push to shore up the slowing economy and investor confidence. 

With stock turnover reaching 710 billion yuan ($101 billion) in the first hour of trading Friday, the Shanghai Stock Exchange was marred by glitches in processing orders and delays, according to messages from brokerages seen by Bloomberg News. Copper rallied back above $10,000 a ton and iron ore broke through $100 a ton. 

By holding the politburo meeting in September rather than December, China’s leaders sent “a signal that the authorities are willing to take more urgent action to achieve the 5% growth target,” senior analysts including Robert Carnell at ING Groep NV said in a note. “We saw a more aggressive-than-expected policy package from the PBOC this week and it is reasonable to expect other policies will soon follow.”

Elsewhere in commodities, oil steadied after a sharp two-day drop, with prices still on course for a substantial weekly decline on prospects of more supply from OPEC members Saudi Arabia and Libya.

Gold headed for a third weekly gain after setting successive record highs on optimism the Fed will maintain an aggressive pace of interest-rate cuts this year.

Key events this week: 

• Eurozone consumer confidence, Friday
• US PCE, University of Michigan consumer sentiment, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures were little changed as of 6:29 a.m. New York time
• Nasdaq 100 futures fell 0.2%
• Futures on the Dow Jones Industrial Average were little changed
• The Stoxx Europe 600 rose 0.3%
• The MSCI World Index rose 0.2%

Currencies

• The Bloomberg Dollar Spot Index fell 0.1%
• The euro fell 0.1% to $1.1163
• The British pound fell 0.2% to $1.3391
• The Japanese yen rose 1.2% to 143.13 per dollar

Cryptocurrencies

• Bitcoin rose 1.4% to $65,578.41
• Ether rose 0.6% to $2,647.26

Bonds

• The yield on 10-year Treasuries was little changed at 3.79%
• Germany’s 10-year yield declined three basis points to 2.15%
• Britain’s 10-year yield declined one basis point to 4.00%

Commodities

• West Texas Intermediate crude rose 0.2% to $67.80 a barrel
• Spot gold fell 0.3% to $2,663.95 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Winnie Hsu and Divya Patil.

©2024 Bloomberg L.P.