European Stocks Advance After GDP Growth Surprise: Markets Wrap

(Bloomberg) — European stocks gained after the euro-area economy grew more than expected in the second quarter, easing fears about the pace of an economic recovery.

The Stoxx 600 index rose 0.3% after struggling to find direction in a session that saw contrasting economic growth data from individual euro-zone member states. The euro edged higher while German bund yields remained steady.

Gross domestic product in the currency bloc rose 0.3% in the three months through June, sustaining the same pace as it did at the start of the year. That exceeded the 0.2% median forecast of economists as both France and Spain beat estimates and Italy kept growing, offsetting a 0.1% drop in Germany.

The print kicked off a week of pivotal economic data releases, US megacap earnings and central bank decisions that would be critical in shaping the trajectory of the market.

S&P 500 and Nasdaq 100 futures contracts gained ahead of the release of US consumer confidence data and the Job Openings and Labor Turnover Survey on Tuesday. The dollar and Treasuries remained steady.

Among the so-called Magnificent Seven technology stocks, Microsoft Corp. is due to publish earnings after the close, with Apple Inc. and Amazon.com Inc. scheduled for releases later this week. Investors will be watching whether big tech megacaps can reap returns from spending on artificial intelligence after an underwhelming start to the reporting season.

“For anything AI related, we’ve been in the investment phase but now we want to see how it translates in terms of return on investment,” said Lionel Jardin, equity sales trader at Marex in Paris.

Also in focus are monetary policy decisions from the Bank of Japan and the US Federal Reserve on Wednesday, followed by the Bank of England a day later.

Among single stocks in Europe, BP Plc’s shares strengthened after maintaining the pace of share buybacks and lifting its dividend on the back of a profit beat. Standard Chartered Plc rose after the lender expanded its buyback program.

In Asia, the MSCI Asia Pacific index is heading for its first monthly drop since April. Shares in Hong Kong led losses on Tuesday as optimism waned over the Chine government’s stimulus plans.

The yen weakened against all its Group-of-10 peers on speculation that policy tightening by the BOJ will be too slow to dent the appeal of yen-funded carry trades.

US policymakers, who’ve kept rates at a more than two-decade high for a full year, are widely expected to leave them unchanged on Wednesday. Still, investors see officials signaling a move in September as risks grow of imperiling a solid, but moderating job market. 

Commodities have erased all of their gains this year as a challenging outlook in China, combined with a selloff in US natural gas and losses in foodstuffs, have weighed on raw materials.

Key events this week:

• Eurozone economic confidence, GDP, consumer confidence, Tuesday
• US JOLTS job openings, consumer confidence, Tuesday
• Microsoft earnings, Tuesday
• Eurozone CPI, Wednesday
• Bank of Japan policy decision, Wednesday
• US ADP employment change, Wednesday
• Fed rate decision, Wednesday
• Meta Platforms earnings, Wednesday
• Eurozone S&P Global Eurozone Manufacturing PMI, unemployment, Thursday
• US initial jobless claims, ISM Manufacturing, Thursday
• Amazon, Apple earnings, Thursday
• Bank of England rate decision, Thursday
• US employment, factory orders, Friday

Some of the main moves in markets:

Stocks

• The Stoxx Europe 600 rose 0.3% as of 10:14 a.m. London time
• S&P 500 futures rose 0.2%
• Nasdaq 100 futures rose 0.3%
• Futures on the Dow Jones Industrial Average were little changed
• The MSCI Asia Pacific Index fell 0.4%
• The MSCI Emerging Markets Index fell 0.3%

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro rose 0.1% to $1.0832
• The Japanese yen fell 0.5% to 154.73 per dollar
• The offshore yuan rose 0.1% to 7.2620 per dollar
• The British pound was little changed at $1.2858

Cryptocurrencies

• Bitcoin fell 0.7% to $66,884.26
• Ether rose 0.6% to $3,341.7

Bonds

• The yield on 10-year Treasuries was little changed at 4.18%
• Germany’s 10-year yield was little changed at 2.37%
• Britain’s 10-year yield advanced one basis point to 4.06%

Commodities

• Brent crude fell 0.3% to $79.58 a barrel
• Spot gold rose 0.2% to $2,389.54 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Aya Wagatsuma and Winnie Hsu.

©2024 Bloomberg L.P.