Asia stocks gain, Treasuries rally on US jobs: Markets wrap

(Bloomberg) — European stocks held near their highest level in four months, as central bankers prepared global policy center toward rate cuts as traders added to wages.

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The Stoxx 600 index rose for a second day as U.S. equity futures advanced. Merck KGaA fell 13% after the evobrutinib trial failure dealt a blow to the German company’s plans to develop another blockbuster drug. Bonds paused a rally that took the U.S. 10-year yield below 4.2% on Tuesday.

Action in Europe fueled the latest move in bonds after the European Central Bank’s most dovish officials said on Tuesday that inflation was showing a “significant” slowdown. The rally found more momentum from weaker-than-forecast U.S. jobs-market data on Tuesday, seen as evidence that inflationary wage pressures are easing, as the Federal Reserve began to cut rates.

Markets have now fully priced in the first of six quarterly point rate cuts by the European Central Bank in 2024, which will cut the key rate by 150 basis points to 2.5%. There is almost a 90% chance of an easing cycle beginning in the first quarter of next year, which was not contemplated three weeks ago.

The big debate for markets is whether central bankers’ recent dovish comments are tantamount to confirming they are gearing up ahead of easy policy, Craig Erlam, senior market analyst at Oanda, wrote in a note to clients.

“What many are now questioning is whether this is enough to warrant such a belief,” he said.

Goldman Sachs Group Inc., JPMorgan Chase & Co. And as markets anticipate a trigger warning from Morgan Stanley Tuesday, optimism that the Federal Reserve won’t cut interest rates soon is overstated by technologies and.

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Highlights of this week:

  • Euro zone retail sales, Wednesday

  • German factory orders, Wednesday

  • US ADP Private Payrolls, Trade Balance, Wednesday

  • The CEOs of Wall Street’s biggest banks, including JP Morgan, Citigroup, Goldman Sachs, Morgan Stanley and Bank of America, are expected to testify before the Senate Banking Committee on regulatory oversight.

  • Bank of Canada monetary policy meeting, Wednesday

  • The Bank of England will release its biannual stability report on the UK financial system and hold a news conference on Wednesday

  • China trade, foreign exchange balance, Thursday

  • Eurozone GDP, Thursday

  • Germany Industrial Production, Thursday

  • US Total Inventories, Initial Jobless Claims, Thursday

  • Germany CBI, Friday

  • Japan Household Expenditure, GDP, Silver

  • Andrea Brischetto, head of financial stability at the Reserve Bank of Australia, speaks at the Sydney Banking and Financial Stability Conference on Friday.

  • American Jobs Report, University of Michigan Consumer Sentiment, Friday

Some key movements in the markets:

Shares

  • The Stoxx Europe 600 was up 0.2% as of 9:50 a.m. London time.

  • S&P 500 futures rose 0.2%

  • Nasdaq 100 futures rose 0.3%

  • The future of the Dow Jones Industrial Average was little changed

  • The MSCI Asia Pacific index rose 1%

  • The MSCI emerging market index rose 0.3%

Coins

  • The Bloomberg Dollar Spot Index was little changed

  • The euro was little changed at $1.0792

  • The Japanese yen was little changed at 147.27 per dollar

  • The offshore yuan was little changed at 7.1675 per dollar

  • The British pound was little changed at $1.2601

Cryptocurrencies

  • Bitcoin was little changed at $43,873.01

  • Ether rose 0.3% to $2,279.79

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Bonds

  • The yield on 10-year Treasuries rose two basis points to 4.18%.

  • Germany’s 10-year yield rose a basis point to 2.26%

  • Britain’s 10-year yield rose four basis points to 4.07%

materials

  • Brent crude fell 0.3% to $77 a barrel

  • Spot gold rose 0.2% to $2,023.14 an ounce

This story was produced with the help of Bloomberg Automation.

–With help from Farah ElBahrawi.

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