June 18, 2024

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Stocks rise from price expectations, dollar falls: Markets wrap

Stocks rise from price expectations, dollar falls: Markets wrap

(Bloomberg) — European stocks rose in thin trading after a European Central Bank official indicated that policymakers may consider successive interest rate cuts starting next month.

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Automakers and utilities led modest advances in the Stoxx Europe 600. Trading value was less than half the 20-day average for this time of day, with UK and US markets closed for the holidays. US stock futures were flat and the dollar gauge fell.

The ECB should not rule out cutting borrowing costs at its June and July meetings, European Central Bank Governing Council member François Villeroy de Galhau said, opposing fellow monetary officials who are uncomfortable with the idea of ​​successive cuts. Chief economist Philip Lane said earlier that the central bank would have to keep policy restrained until 2024, even after cutting interest rates next month.

A rate cut by the European Central Bank in June has been widely announced, but subsequent steps are less clear given uncertainty over wage growth and factors such as fighting in the Middle East. Data this week may show headline inflation in the euro zone rose in May.

“European inflation is back,” although the May rise may be temporary, Credit Agricole strategists led by Jean-François Parin wrote in a note. “This does not raise doubts about the June cut but does increase the risk of additional pricing cuts later.”

Among individual stocks in Europe, EFG International AG rose as much as 4.7% following a Bloomberg news report after the market close on Friday that Julius Baer Group Ltd was exploring the possibility of acquiring its rival private Swiss bank. Julius Baer shares fell by 0.8%.

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The MSCI Asian Stock Index posted its biggest gain since May 16, led by stock gauges in Hong Kong, China and Japan.

A range of inflation is set to be recorded from Australia to Japan, the Eurozone and the United States this week, as traders bet on the outlook for monetary policy. The Fed's preferred measure of core inflation is due on Friday and is expected to show modest relief. Federal Reserve Chairman Jerome Powell stressed the need for more evidence that inflation is on its way to the 2% target before easing policy.

Among the US central bankers scheduled to speak this week are John Williams, Lisa Cook, Neel Kashkari and Lori Logan.

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Trading in cash Treasuries was closed. The “T+1” rule that has the potential to cause problems for foreign investors will come into effect when traders return from the long weekend – making US stocks settle in one day instead of two.

Meanwhile, gold rose, while copper futures fell. Oil advanced after its biggest weekly loss in four weeks, with the focus on Sunday's OPEC+ supply meeting and US demand at the start of the summer driving season.

Some key events this week:

  • The International Monetary Fund is holding discussions with Ukrainian authorities to review economic policies as the country seeks to release the next batch of $2.2 billion in aid, on Monday.

  • Cleveland Fed President Loretta Mester speaks at a Bank of Japan event in Tokyo. Minneapolis Fed President Neel Kashkari and ECB Governing Council member Klaas Knott address the Barclays-CEPR International Monetary Policy Forum, Tuesday.

  • The presidential elections in South Africa are the most important since the end of apartheid, Wednesday

  • The Fed will release its “Beige Book” economic survey on Wednesday

  • South Africa Interest Rate Decision, US Initial Jobless Claims, GDP, Wholesale Inventories, Thursday

  • New York Fed President John Williams speaks at the Economic Club of New York on Thursday

  • GDP data for Canada, the Eurozone and Turkey were published on Friday

  • Unemployment in Japan, CPI in Tokyo, industrial production, retail sales, Friday

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Some key movements in the markets:

Stores

  • S&P 500 futures rose 0.2% as of 12:17 p.m. New York time

  • Dow Jones Industrial Average futures were little changed

  • MSCI World Index rose 0.2%

  • MSCI Emerging Markets Index rises 0.7%

  • The Stoxx Europe 600 index rose 0.3%.

Currencies

  • The Bloomberg Dollar Spot Index fell 0.2%.

  • The euro rose 0.1 percent to $1.0861

  • The British pound rose 0.3% to its highest level since March 20

  • There was little change in the Japanese yen at 156.88 to the dollar

  • The Mexican peso rose 0.3% to 16.6516

  • The Brazilian real fell 0.1 percent to 5.1733 per dollar

Digital currencies

  • Bitcoin rose 2.6% to $70,488.04

  • Ethereum rose 2.6% to its highest levels since March 13

Bonds

  • The yield on the 10-year Treasury note fell 1 basis point to 4.46%.

  • The yield on 10-year German bonds fell by four basis points to 2.55%.

  • There was little change in the yield on British bonds for 10 years at 4.26%.

Goods

  • West Texas Intermediate crude rose 1.3% to $78.75 a barrel

  • Spot gold rose 0.8%, more than any closing gain since May 17

This story was produced with assistance from Bloomberg Automation.

–With assistance from Matthew Burgess, Catherine Bosley, and Michael Msika.

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