(Bloomberg) — European stocks and US futures kept to small ranges as investors looked forward to a rush of major earnings for insights on whether the record-breaking rally on Wall Street can continue.
Most Read from Bloomberg
Europe’s Stoxx 600 crept to a new two-year high as media and travel and leisure stocks led gains. US equity futures were steady after another record close on Wall Street stretched the S&P 500’s gains this month to 3.3%. The Nasdaq 100 has surged 4.6%. Stocks in Asia slipped, led by declines in China amid growing pressure on policymakers to cut rates to boost the economy.
US earnings grab the limelight later as the busiest week so far of this reporting season moves up a gear. Microsoft Corp. and Alphabet Inc. kick-off updates from megacap tech’s so-called Magnificent Seven, providing the first test of whether the bullish sentiment around the group looks sustainable.
The tech rally has been fueled by expectations of strong earnings supported by interest-rate cuts from the Federal Reserve. While the Fed is expected to hold rates this week, investors are keenly awaiting comments from Chair Jerome Powell after Wednesday’s decision for clues on the policy outlook. Traders are assigning roughly even odds to the prospect that the central bank will start lowering borrowing costs at its next meeting in March.
Treasury yields extended their drop Tuesday after a cut in the quarterly borrowing estimate by the US Treasury eased concerns about the flood of debt being issued to cover the federal deficit. The dollar was steady.
Oil held steady as traders assessed news that Saudi Aramco has abandoned a plan to raise oil production capacity to 13 million barrels a day and maintain it at 12 million instead. Markets also waited for a US response to the deadly attack on American troops in Jordan, which could risk an escalation of tensions in a region key to global crude production.
In Asia, Hong Kong stocks fell more than 2%, while those on the mainland were poised to decline for a third day. The impact of China Evergrande Group’s liquidation order on Monday pushed a Bloomberg index of Chinese developers over 4% lower.
“Valuations are clearly cheap, but for good reasons including self-inflicted damage to the tech and real estate sectors,” said Kieran Calder, head of equity research for Asia at Union Bancaire Privee. “Our view is that investor confidence cannot return until the property sector is finally fixed. Ongoing newsflow confirms that the property crisis is still hot and not easy to resolve.”
China’s benchmark government bond yield fell to its lowest in nearly 22 years as mounting expectations for further monetary easing increased.
Key events this week:
-
Eurozone economic confidence, GDP, consumer confidence, Tuesday
-
US Conf. Board consumer confidence, JOLTS jobs openings, Tuesday
-
Microsoft, Alphabet earnings, Tuesday
-
China non-manufacturing PMI, manufacturing PMI, Wednesday
-
Japan industrial production, retail sales, housing starts, Wednesday
-
Bank of Japan issues summary of opinions from January policy meeting, Wednesday
-
Boeing announces earnings amid US government safety probe, Wednesday
-
Federal Reserve interest rate decision and Fed Chair Jerome Powell’s news conference, Wednesday
-
US Treasury quarterly refunding, Wednesday
-
China Caixin manufacturing PMI, Thursday
-
Eurozone S&P Global Manufacturing PMI, CPI, unemployment, Thursday
-
US productivity, construction spending, ISM Manufacturing, initial jobless claims, Thursday
-
Apple, Amazon, Meta, Deutsche Bank, BNP Paribas earnings, Thursday
-
Bank of England interest rate decision, Thursday
-
US employment report, University of Michigan consumer sentiment, factory orders, Friday
Some of the main moves in markets:
Stocks
-
The Stoxx Europe 600 rose 0.2% as of 8:24 a.m. London time
-
S&P 500 futures were little changed
-
Nasdaq 100 futures were little changed
-
Futures on the Dow Jones Industrial Average fell 0.2%
-
The MSCI Asia Pacific Index fell 0.4%
-
The MSCI Emerging Markets Index fell 0.6%
Currencies
-
The Bloomberg Dollar Spot Index was little changed
-
The euro was little changed at $1.0823
-
The Japanese yen was little changed at 147.48 per dollar
-
The offshore yuan was little changed at 7.1862 per dollar
-
The British pound fell 0.2% to $1.2688
Cryptocurrencies
-
Bitcoin rose 0.6% to $43,424.51
-
Ether rose 0.2% to $2,311.78
Bonds
-
The yield on 10-year Treasuries declined two basis points to 4.05%
-
Germany’s 10-year yield was little changed at 2.23%
-
Britain’s 10-year yield declined one basis point to 3.86%
Commodities
-
Brent crude was little changed
-
Spot gold rose 0.3% to $2,038.74 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Tassia Sipahutar.
Most Read from Bloomberg Businessweek
©2024 Bloomberg L.P.