Stocks Drift With Earnings Set to Test Bull Market: Markets Wrap

(Bloomberg) — European stocks and US futures drifted as investors looked ahead to corporate results for further vindication of soft economic landing bets.

Europe’s Stoxx 600 and S&P 500 futures were little changed following volatile trading in China, which reflected skepticism among some traders about Beijing’s latest efforts to jumpstart growth. The euro edged lower as investors anticipated an interest rate cut from the European Central Bank on Thursday. 

“It remains uncertain whether the market will finish the year as strongly as it began and whether this easing cycle will provide substantial momentum for equities,” National Bank of Canada economists including Stefane Marion wrote in a note to clients. “The current easing cycle is unfolding in an environment of unusually high valuations.”

Corporate scorecards are the next litmus test for a stock rally that delivered a fresh record for the S&P 500 last week. Results from Citigroup Inc., Goldman Sachs Group Inc. and Bank of America Corp. are due Tuesday, where the banks will provide an early verdict on the impact of interest rate cuts on their bottom lines. JPMorgan Chase & Co, Wells Fargo & Co and Bank of New York Mellon Corp. all topped estimates Friday. 

In Europe, profits are anticipated to come in lower due to anemic economic growth and a stunted recovery in China, which is likely to drag down luxury goods makers like LVMH. 

This is likely to cement ECB’s decision to push for an interest-rate cut that policymakers had all but ruled out just a month ago.

Concerns about French finances and German malaise had the euro on the back foot on Monday, while French bond futures were little changed. The region’s biggest economy is suffering a mild recession and output across the whole of 2024 will be flat, according to a Bloomberg survey.  

“Clearly, softer activity data and faster disinflation have had an immediate impact on both ECB communication and markets, which are now pricing a 95% probability of a 25-basis point cut this week,” Barclays Plc strategists including Themistoklis Fiotakis wrote in a note to clients.  

Cash Treasuries trading is closed Monday for a US holiday. 

Key events this week: 

• China trade balance, Monday
• India CPI, Monday
• UK unemployment rate and average weekly earnings, Tuesday
• Eurozone industrial production, Tuesday
• Canada CPI, Tuesday
• Goldman Sachs, Bank of America, Citigroup earnings, Tuesday
• Republican presidential candidate Donald Trump will be interviewed by Bloomberg editor-in-chief John Micklethwait at the Economic Club of Chicago, Tuesday
• New Zealand CPI, Wednesday
• Thailand, Philippines and Indonesia central bank interest-rate decisions, Wednesday
• UK CPI, PPI, RPI and house price index, Wednesday
• ASML, Morgan Stanley earnings, Wednesday
• Australia unemployment, Thursday
• Eurozone CPI, ECB rate decision, Thursday
• US retail sales, jobless claims, industrial production, business inventories, Thursday
• TSMC, Netflix earnings, Thursday
• Japan CPI, Friday
• China GDP, retail sales, industrial production, home prices, Friday
• UK retail sales, Friday

Some of the main moves in markets:

Stocks

• The Stoxx Europe 600 was little changed as of 10:31 a.m. London time
• S&P 500 futures rose 0.1%
• Nasdaq 100 futures rose 0.2%
• Futures on the Dow Jones Industrial Average were little changed
• The MSCI Asia Pacific Index was little changed
• The MSCI Emerging Markets Index was little changed

Currencies

• The Bloomberg Dollar Spot Index rose 0.1%
• The euro was little changed at $1.0933
• The Japanese yen fell 0.2% to 149.37 per dollar
• The offshore yuan fell 0.2% to 7.0866 per dollar
• The British pound was little changed at $1.3061

Cryptocurrencies

• Bitcoin rose 3% to $64,594.43
• Ether rose 2.6% to $2,525.05

Bonds

• The yield on 10-year Treasuries was little changed at 4.10%
• Germany’s 10-year yield was little changed at 2.27%
• Britain’s 10-year yield advanced two basis points to 4.22%

Commodities

• Brent crude fell 2.1% to $77.36 a barrel
• Spot gold was little changed

This story was produced with the assistance of Bloomberg Automation.

–With assistance from James Hirai, Sagarika Jaisinghani and Catherine Bosley.

©2024 Bloomberg L.P.