Stocks Rise as Traders Recalibrate Rate-Cut Bets: Markets Wrap

(Bloomberg) — American equity futures rose as subdued inflation data rekindled expectations of Federal Reserve rate cuts. The dollar advanced after a US government shutdown was averted.

Contracts on the Nasdaq 100 added 0.5% and those on the S&P 500 rose 0.3% following solid gains on Wall Street on Friday after the so-called core personal consumption expenditures price index increased at the slowest pace since May. Europe’s stock benchmark edged higher.

Monday’s moves offer investors some respite after a stream of robust US economic data saw the Fed scale back the number of cuts it anticipates in 2025. Overall sentiment remains cautious as investors brace for the prospect of sweeping global tariffs imposed by US President-elect Donald Trump, and as China continues to see a lackluster economic recovery.

“There are still hopes that the US stock markets in particular will end 2024 with a positive undertone,” Dana Malas, a strategist at SEB, wrote in a note. “After two explosive weeks of central banking and news, to say the least, it is time for the market to recharge batteries and update forecast models for the world that begins on January 20 with Donald Trump in the White House.”

A Bloomberg gauge of the dollar rose after sliding 0.5% on Friday, and Treasury yields ticked higher. President Joe Biden signed funding legislation to keep the US government operating until mid-March, avoiding a year-end shutdown and kicking future spending decisions into Trump’s presidency. 

Europe’s Stoxx 600 index fluctuated before turning higher as drugmaker Novo Nordisk A/S staged a partial recovery from the biggest slump in more than two decades on Friday. 

Among other individual movers, Evolution AB slumped after the UK Gambling Commission began a review of its Malta operations. Direct Line Insurance Group Plc shares rose after Aviva Plc agreed to buy the insurer in a deal valuing the firm at around £3.7 billion ($4.7 billion).

European government bonds fell after European Central Bank President Christine Lagarde said policymakers remain alert to lingering price pressures in the services sector, while confident the central bank is nearing its consumer-price target.

The euro-area economy will pick up less momentum next year than previously foreseen and only expand slightly more strongly than in 2024, according to a Bloomberg survey. The predictions are more downbeat than those of the ECB, which also lowered its outlook this month as it cut interest rates for the fourth time since June.

A gauge of Asian equities snapped a six-day decline, with benchmarks in South Korea and Taiwan rising more than 1%. Asian stocks are set for their first quarterly loss since September 2023 while a gauge of the region’s currencies fell to its lowest in more than two years last week.

Elsewhere, oil edged higher after a weekly drop, as traders gauged Trump’s threat to reimpose US control over the Panama Canal.

Key events this week: 

• Bank of Canada issues summary of deliberations, Monday
• Mexico trade, Monday
• RBA publishes minutes of Dec. rate meeting, Tuesday
• Christmas Day, Wednesday
• Bank of Japan Governor Kazuo Ueda addresses Keidanren council, Wednesday
• US initial jobless claims, Thursday
• Colombia’s central bank publishes minutes of rate meeting, Thursday
• Japan Tokyo CPI, unemployment, industrial production, retail sales, Friday
• BOJ publishes summary of opinions for December meeting, Friday
• South Korean court to hold preliminary hearing on impeachment of President Yoon Suk Yeol over his martial law declaration, Friday
• Brazil unemployment, Friday

Some of the main moves in markets: 

Stocks

• The Stoxx Europe 600 rose 0.2% as of 9:24 a.m. London time
• S&P 500 futures rose 0.2%
• Nasdaq 100 futures rose 0.4%
• Futures on the Dow Jones Industrial Average were little changed
• The MSCI Asia Pacific Index rose 1.2%
• The MSCI Emerging Markets Index rose 1.1%

Currencies

• The Bloomberg Dollar Spot Index rose 0.1%
• The euro fell 0.1% to $1.0417
• The Japanese yen fell 0.2% to 156.63 per dollar
• The offshore yuan fell 0.2% to 7.3069 per dollar
• The British pound was little changed at $1.2580

Cryptocurrencies

• Bitcoin rose 0.7% to $95,759.51
• Ether rose 1.4% to $3,328.1

Bonds

• The yield on 10-year Treasuries advanced two basis points to 4.54%
• Germany’s 10-year yield advanced four basis points to 2.32%
• Britain’s 10-year yield advanced five basis points to 4.56%

Commodities

• Brent crude rose 0.4% to $73.25 a barrel
• Spot gold rose 0.2% to $2,628.08 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Matthew Burgess and Audrey Wan.

©2024 Bloomberg L.P.