(Bloomberg) — Shares in Europe rose after a holiday break, tracking gains in Asia and on Wall Street as investors bet that the Federal Reserve will cut interest rates as early as March.
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The Stoxx Europe 600 climbed 0.3% in early trading. Technology stocks were among the biggest gainers as Prosus NV rebounded from a slump triggered by a selloff in Tencent Holdings Ltd. Miners advanced as iron ore held near an 18-month high, with Anglo American Plc up more than 2% and Glencore Plc rising 1.8%.
On the downside, container shipping firms fell after AP Moller-Maersk AS said it’s preparing to resume shipping through the Red Sea. The stocks had rallied on expectations that the disruption caused by attacks on Red Sea container traffic would allow companies to raise the prices. Maersk dropped as much as 5% Hapag-Lloyd AG slumped 4.7%.
US futures were virtually flat after the S&P 500 closed Tuesday within 0.5% of its record high, achieved early last year when interest rates remained at pandemic lows. The 10-year Treasury yield fell three basis points after Tuesday’s auctions drew buyers as the market prices in an aggressive path of Fed easing in 2024. Bond yields across Europe also fell. The dollar was steady against most major currencies.
“S&P 500 buyers will certainly not back down before sending the index to a fresh high this week, or the next,” said Ipek Ozkardeskaya, a senior analyst at Swissquote Bank SA. Still, “the market optimism is overstretched. The Fed will probably cut rates but not at the speed that’s currently priced in. Once the Santa high fades, the hangover will hit,” she said.
Australia’s S&P/ASX 200 index rose to its highest since April 2022, fueled by gains in miners. Mainland China equities rebounded from earlier losses, after data showed a quickening speed of growth in the country’s industrial profits, helped by favorable base effects.
Japan’s Nikkei 225 index gained over 1%, hovering slightly below its previous high in July, after Bank of Japan board members discussed the potential timing of ending the negative rate policy during their meeting last week, with several members indicating they see no rush to make the move. The yen weakened and Japanese government bond yields fell after the release of the summary.
“Bullish views prevail among investors towards year end as there are no particular blind spots in Japanese equities,” said Masanari Takada, a derivatives strategist at JPMorgan Securities Japan Co. “While an earlier-than-expected BOJ policy change and yen appreciation may be a risk to top-down traders, the results from BOJ summary today provided a sense of relief.”
In Hong Kong, major tech stocks partially recovered from Friday’s $80 billion rout, after authorities signaled a willingness to dial back controversial new gaming restrictions. Tencent climbed as much as 6.2% while smaller rival NetEase jumped more than 14%.
US stocks have risen 4.5% this month so far, with the gain since the start of the year now 24%. While the US and Australian indexes near record highs and Indian gauges hover near all-time peaks from earlier this month, MSCI’s all-country index is 4.5% off its November 2021 record. Asia is a laggard region, with the MSCI Asia-Pacific Index still 25% off its February 2021 high.
Oil reversed gains fueled by concerns about Red Sea shipping traffic, while gold slipped. Bitcoin rose slightly after a retreat as traders assessed how crypto markets might react if regulators meet expectations by approving the first US exchange-traded funds investing directly in the token.
Key events this week:
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Japan industrial production, retail sales, Thursday
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US wholesale inventories, initial jobless claims, Thursday
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UK Nationwide house prices, Friday
Some of the main moves in markets:
Stocks
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The Stoxx Europe 600 rose 0.3% as of 8:32 a.m. London time
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S&P 500 futures were little changed
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Nasdaq 100 futures were little changed
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Futures on the Dow Jones Industrial Average were little changed
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The MSCI Asia Pacific Index rose 1.1%
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The MSCI Emerging Markets Index rose 1%
Currencies
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The Bloomberg Dollar Spot Index was little changed
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The euro was little changed at $1.1045
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The Japanese yen fell 0.2% to 142.73 per dollar
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The offshore yuan was little changed at 7.1481 per dollar
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The British pound fell 0.1% to $1.2708
Cryptocurrencies
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Bitcoin rose 0.6% to $42,604.57
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Ether rose 0.9% to $2,242.96
Bonds
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The yield on 10-year Treasuries declined two basis points to 3.87%
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Germany’s 10-year yield declined three basis points to 1.95%
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Britain’s 10-year yield declined two basis points to 3.49%
Commodities
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Akemi Terukina and Richard Henderson.
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