(Bloomberg) – Rising U.S. equity futures signaled a continuation of the index’s lofty gains from Wednesday, fueled by China’s softer stance on Covid and confirmation of a faster pace of rate hikes. slow from Federal Reserve Chairman Jerome Powell. The dollar hit a three-month low.
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S&P 500 contracts climbed 0.5%, a day after Powell’s comments helped the underlying benchmark close November with a second month of gains for the first time in more than a year . Those of the tech-heavy Nasdaq 100 also rose, after the underlying gauge jumped 4.5% on Wednesday. European stocks hit a six-month high.
In new U.S. economic data on Thursday, a core inflation gauge in October rose less than expected as consumer spending firmed, a step in the right direction for a Fed looking for an extended period of easing. price pressures. Jobless claims fell while continuing claims hit their highest level since February, suggesting Americans who lose jobs are having a harder time finding a new one in a cooling labor market gradually.
The buoyant mood sent the dollar tumbling against its Group of 10 counterparts for the third day in a row, as 10-year Treasury yields were near two-month lows.
“There is no longer a one-sided bet on the strength of the dollar,” said Sarah Hewin, senior economist at Standard Chartered in London. “We had a good signal regarding a Powell pivot, so the market has lowered its expectation for peak rates.”
Powell’s remarks confirmed expectations that the Federal Reserve will raise interest rates by 50 basis points this month, as opposed to a series of four 75 basis point hikes. Prices in the swap market indicate that the fed funds rate will peak below 5% in May. Prior to Powell’s comments, the market was forecasting a peak above this level in June.
There are signs that slowing growth is affecting corporate earnings. In the United States, software maker Salesforce fell sharply after a profit outlook that appeared to reflect a weaker economic environment, while discount chain Dollar General lost ground after lowering its profit forecast. per share.
The likelihood of an economic recession could hit U.S. stocks in the first half of 2023, strategists at JPMorgan Chase & Co. have told clients. Forecasting a 9% decline in earnings, they added: “We do not expect this year’s constructive growth backdrop to persist into 2023.”
Sentiment was bolstered after China’s top coronavirus official, Vice Premier Sun Chunlan, said the response was entering a new phase, with the omicron variant weakening and vaccination of more and more Chinese. Beijing has also indicated that some Covid patients may self-isolate at home.
Elsewhere, oil rose, extending a three-day rally, supported by China’s softer stance on Covid Zero and the upcoming OPEC+ meeting which will set supply levels for 2023.
The South African rand weakened sharply when Bloomberg reported that President Cyril Ramaphosa was considering stepping down following an advisory group report that concluded he may have violated the constitution, according to people familiar with the matter. .
Key events this week:
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S&P Global PMIs, Thursday
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U.S. Construction Spending, Consumer Income, Initial Jobless Claims, ISM Manufacturing, Thursday
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BOJ’s Haruhiko Kuroda speaks on Thursday
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U.S. unemployment, nonfarm payrolls, Friday
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ECB’s Christine Lagarde speaks on Friday
Some of the major movements in the markets:
Shares
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S&P 500 futures rose 0.5% at 8:42 a.m. PT
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Nasdaq 100 futures rose 0.6%
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Dow Jones Industrial Average futures rose 0.3%
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The Stoxx Europe 600 rose 1.1%
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The MSCI World index rose 0.8%
Currencies
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The Bloomberg Dollar Spot Index fell 0.8%
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The euro rose 1% to $1.0505
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The British pound rose 1.5% to hit $1.2235
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The Japanese yen rose 1.5% to 135.97 per dollar
Cryptocurrencies
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Bitcoin rose 0.3% to $17,154.55
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Ether fell 0.7% to $1,288.13
Obligations
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The yield on 10-year Treasury bills fell three basis points to 3.58%
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Germany’s 10-year yield fell 12 basis points to 1.81%
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The UK 10-year yield fell seven basis points to 3.09%
Goods
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West Texas Intermediate crude rose 2.2% to $82.30 a barrel
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Gold futures rose 2.4% to $1,801.80 an ounce
This story was produced with assistance from Bloomberg Automation.
–With the help of Richard Henderson.
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