(Bloomberg) — Stocks advanced on speculation that a cooling economy will give the Federal Reserve room to cut rates this year. Government bond yields rose after the biggest fall in two days this year.
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The European Stoxx 600 Index climbed 0.5% and contracts for the S&P 500 and Nasdaq 100 moved higher. The yield on ten-year government bonds rose two basis points to 4.35%, after falling six basis points on Tuesday.
Markets are turning their attention to this week’s raft of labor market data, including Friday’s US jobs report, for further clues as to when the Fed will make rate cuts. Job vacancies in the US reached the lowest level since 2021, the so-called JOLTS report showed on Tuesday. Figures due later Wednesday will include private payroll figures and the latest figures on the US services sector.
“We’re starting to see some slack in the labor market, which gives the Fed more flexibility,” Justin Onuekwusi, chief investment officer at St James’s Place Management, said in an interview. “As we have seen weakness in labor market data over the past week, all eyes will be on this figure,” he said of the payroll data.
Retailers led the advance in Europe, with Zara owner Inditex SA up more than 5% after a stronger-than-expected trading update.
In Asia, Indian stocks outperformed as an alliance partner of Prime Minister Narendra Modi’s party expressed support for the formation of a coalition government. The Nifty 50 Index rose more than 2%, recouping some of Tuesday’s losses, when the index fell the most in four years.
Meanwhile, traders are looking ahead to an expected cut in key European Central Bank interest rates from a record high of 4% on Thursday. While the policy path following this week’s rate cut is unclear, a start to the ECB’s pre-Fed easing cycle, along with an improving outlook for earnings in Europe, could help the Stoxx 600 build on its record rally this year.
“Overall, it’s a pretty good combination for stocks,” said Lilia Peytavin, portfolio strategist at Goldman Sachs Group Inc. in Paris. “What is crucial on Thursday is the ECB’s new growth and inflation outlook. We expect growth in the eurozone to recover in the coming quarters,” a development that should be positive for so-called cyclical stocks.
A Bloomberg gauge of the dollar’s strength was little changed after gains in the past two sessions. The yen retreated against the dollar after April Japanese wage data raised questions about the strength of wage increases.
On the commodity side, oil prices were little changed after falling on Tuesday following an industry report that pointed to a rise in US crude inventories. Bitcoin reached the $70,000 mark.
Main events this week:
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Eurozone S&P Global Services PMI, PPI, Wednesday
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Tariff decision Canada, Wednesday
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US ADP Employment, S&P Services PMI, ISM Services, Wednesday
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Eurozone retail sales, ECB interest rate decision, Thursday
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First US unemployment claims, trading, Thursday
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Chinese trading, currency reserves, Friday
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Eurozone GDP, Friday
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U.S. unemployment rate, nonfarm payrolls, Friday
Some of the major moves in the markets:
Shares
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The Stoxx Europe 600 rose 0.5% as of 9:46 a.m. London time
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S&P 500 futures rose 0.1%
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Nasdaq 100 futures rose 0.3%
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Futures on the Dow Jones Industrial Average rose 0.2%
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The MSCI Asia Pacific Index was little changed
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The MSCI Emerging Markets Index rose 0.9%
Currencies
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The Bloomberg Dollar Spot Index was little changed
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The euro was little changed at $1.0875
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The Japanese yen fell 0.9% to 156.21 per dollar
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The offshore yuan fell 0.1% to 7.2561 per dollar
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The British pound was little changed at $1.2773
Cryptocurrencies
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Bitcoin rose 0.9% to $71,038.76
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Ether was little changed at $3,805.6
Bonds
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The yield on ten-year government bonds rose by two basis points to 4.35%
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The German ten-year yield was little changed at 2.54%
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The British ten-year yield rose by three basis points to 4.21%
Raw materials
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Brent crude rose 0.3% to $77.77 per barrel
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Spot gold rose 0.3% to $2,333.64 an ounce
This story was produced with the help of Bloomberg Automation.
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