European shares set to rise after gains in Japan: markets rally

(Bloomberg) — European stocks are poised for gains on the first day of trading in the fourth quarter, after a weaker yen boosted Japanese stocks.

Most read from Bloomberg

European stock futures rose during Asian trading hours. The Nikkei 225 index rose 2%, a day after the benchmark fell nearly 5% due to the ruling party’s leadership race. Asian stocks also rose, while US futures pointed to a weaker open. China and Hong Kong are closed for holidays.

The yen weakened against the dollar on Tuesday after Federal Reserve Chairman Jerome Powell said the central bank will cut interest rates “over time,” while reiterating that the overall economy remains on solid footing. Markets also braced for some impact after Israel said it had begun “targeted ground attacks” in Lebanon.

“I still think global risk assets will do well heading into the year as the macro backdrop and growth prove to be more resilient than previously expected,” said David Chao, strategist at Invesco Asset Management. “So the near-term market narrative has shifted from questions about a slowing US economy to the size and speed of Fed rate cuts for the rest of the year.”

Asian shares beat American and European peers in the third quarter for the first time since 2022. Asian assets are now a focus for global investors as they prepare for lower US interest rates and a presidential election that is likely to further shake financial markets.

Chinese markets are on a weeklong holiday on Monday after posting their biggest rise in 16 years. The MSCI China Index beat an emerging markets benchmark that excludes the country’s stocks by nearly 22 percentage points in September, the largest margin of outperformance since June 1999, according to data compiled by Bloomberg.

In Japan, trading house shares rose after Berkshire Hathaway Inc. banks for a potential yen bond offering. In other political news, Shigeru Ishiba was essentially confirmed as prime minister on Tuesday after the leadership battle previously rattled investors who had bet on more monetary stimulus from his rival.

In Australia, retail sales rose more than expected in August as tax cuts and warmer weather prompted households to spend more. The figures show that the Australian dollar outperformed its major peers. Shares of Australian iron ore miners fell as the metal fell, after rising to its highest level since early July on Monday.

The story continues

In the US, the S&P 500 advanced for a fourth straight quarter – its longest winning streak since 2021. The tech-focused Nasdaq 100 had a similar run.

“The bull market has survived the historically weakest quarter of the year, the third quarter, and will likely remain intact at least through the end of the year as profits remain high, interest rates move lower and consumers continue to spend,” he said. Emily Bowersock Hill at Bowersock Capital Partners.

“We expect the fourth quarter to be very similar to the third quarter – increased volatility, but with a strong close,” she added.

In other news, the International Longshoremen’s Association closed all ports from Maine to Texas on Tuesday, according to a statement from its Facebook page. The affected ports have the combined capacity to handle as much as half of all U.S. trade volumes, and the strike will halt the movement of containers and cars.

In the commodities sector, oil rose slightly as investors assessed the risks of a wider conflict in the Middle East.

Main events this week:

• Atlanta Fed President Raphael Bostic, Fed Governor Lisa Cook, Richmond Fed President Thomas Barkin and Boston Fed President Susan Collins speak Tuesday

• ECB policymakers speaking on Tuesday include Olli Rehn, Luis de Guindos, Isabel Schnabel and Joachim Nagel

• BOE chief economist Huw Pill will speak on Tuesday

• South Korea CPI, S&P Global Manufacturing PMI on Wednesday

• Fed speakers include Thomas Barkin of Richmond, Beth Hammack of Cleveland, Alberto Musalem of St. Louis and Fed Governor Michelle Bowman on Wednesday

• U.S. Nonfarm Payrolls, Friday

Some of the major moves in the markets:

Stocks

• Futures on the S&P 500 were little changed at 6:51 a.m. London time

• Nasdaq 100 futures were little changed

• Futures on the Dow Jones Industrial Average were little changed

• The MSCI Asia Pacific Index rose 0.1%

• The MSCI Emerging Markets Index fell 0.1%

• Futures on the S&P 500 were little changed

• Japan’s Topix rose 1.7%

• Australia’s S&P/ASX 200 fell 0.8%

• Euro Stoxx 50 futures rose 0.2%

Currencies

• The Bloomberg Dollar Spot Index was little changed

• The euro was little changed at $1.1140

• The Japanese yen fell 0.5% to 144.28 per dollar

• The offshore yuan fell 0.1% to 7.0166 per dollar

• The British pound was little changed at $1.3378

Cryptocurrencies

• Bitcoin fell 0.1% to $63,717.31

• Ether rose 0.9% to $2,638.3

Bonds

• The yield on 10-year government bonds was little changed at 3.78%

• The German ten-year yield fell by one basis point to 2.12%

• The British ten-year yield rose by three basis points to 4.00%

• The Japanese ten-year yield remained unchanged at 0.850%

• The Australian ten-year yield rose by four basis points to 4.01%

Raw materials

• Spot gold rose 0.3% to $2,643.68 an ounce

• West Texas Intermediate crude rose 0.2% to $68.31 a barrel

This story was produced with the help of Bloomberg Automation.

–With help from Jason Scott.

Most read from Bloomberg Businessweek

©2024 BloombergLP