(Bloomberg) — Stocks rose along with Treasuries as global markets stabilized after turbulence caused by failed bets on the size and timing of Federal Reserve rate cuts.
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Europe’s Stoxx 600 index climbed 0.2%, while US futures pointed to the S&P 500’s first stock market gain in five days as Wall Street opened. Taiwan Semiconductor Manufacturing Co. reported its first profit increase in a year as strong demand for AI revived growth at the world’s largest contract chipmaker. An index of the dollar fell for a second day and the yield on 10-year government bonds fell 2 basis points to 4.57%.
Investors are paring gains from a record first-quarter rally as they come to grips with a resilient U.S. economy and persistent inflation that is forcing them to recalibrate interest rates. Money markets are signaling just two Fed rate cuts this year, starting in September, after a new round of hot inflation sent Treasury yields to their highest level in 2024.
To offset disappointment over the speed of rate cuts, investors are more optimistic about growth and its potential spillover to stocks, said Peter Oppenheimer, head of global equity strategy at Goldman Sachs Group Inc.
“Growth is fine, but it’s not likely that we’ll get the boost in terms of lower interest rates that markets expected,” Oppenheimer said in an interview with Bloomberg TV. “That’s causing some indigestion, so revenue is going to be really critical here.”
The next set of earnings will be announced by Netflix Inc., Blackstone Inc. and L’Oréal SA. Investors will also analyze the first US unemployment data and speakers from a range of central banks.
On foreign exchange markets, the yen remained stable following a joint statement by US Treasury Secretary Janet Yellen, along with the finance ministers of Japan and South Korea, in which they expressed “serious concerns” about the depreciation of the two Asian coins. A global gauge of emerging market currencies gained for a second day, signaling some stability after hitting a 2024 low earlier this week.
“The US has effectively signaled intervention,” said Keiichi Iguchi, senior strategist at Resona Holdings Inc. in Tokyo. “This has increased speculation that a coordinated intervention is possible.”
Elsewhere, oil held onto most of Wednesday’s 3% decline, boosted by weaker Chinese industrial data and a rise in US crude inventories, while gold rose.
Main events this week:
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American Conf. Board leading index, existing home sales, initial unemployment claims, Thursday
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Fed Governor Michelle Bowman speaks Thursday
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New York Fed President John Williams will speak on Thursday
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Atlanta Fed President Raphael Bostic will speak on Thursday
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BOE Deputy Governor Dave Ramsden and ECB Governing Council Member Joachim Nagel speak on Friday
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Chicago Fed President Austan Goolsbee will speak on Friday
Some of the major moves in the markets:
Shares
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The Stoxx Europe 600 rose 0.2% as of 10:16 a.m. London time
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S&P 500 futures rose 0.2%
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Nasdaq 100 futures rose 0.3%
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Futures on the Dow Jones Industrial Average were little changed
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The MSCI Asia Pacific Index rose 0.7%
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The MSCI Emerging Markets Index rose 0.7%
Currencies
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The Bloomberg Dollar Spot Index fell 0.1%
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The euro was little changed at $1.0678
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The Japanese yen was little changed at 154.38 per dollar
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The offshore yuan was little changed at 7.2483 per dollar
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The British pound rose 0.2% to $1.2473
Cryptocurrencies
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Bitcoin rose 1.1% to $61,554.18
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Ether rose 0.9% to $2,999.76
Bonds
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The yield on ten-year government bonds fell by two basis points to 4.57%
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The German ten-year yield fell by two basis points to 2.45%
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The British ten-year yield fell by four basis points to 4.22%
Raw materials
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Brent crude fell 0.7% to $86.69 per barrel
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Spot gold rose 0.8% to $2,378.93 an ounce
This story was produced with the help of Bloomberg Automation.
–With assistance from Matthew Burgess, Sujata Rao, Francine Lacqua, and Catherine Bosley.
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