- German inflation data point to price spikes
- European stocks hit new nine-month highs
- Chinese stocks defy the downtrend
- US stock index futures firmer
- The Swedish central bank hikes interest rates by 50 basis points.
LONDON, February 9 (Reuters) – Gains from Walt Disney, Siemens and AstraZeneca allayed investor worries about the economy and the future pace of rate hikes, helping stocks soar to one-year highs in Europe.
Firmer S&P 500 futures and Nasdaq futures underpinned sentiment in Europe and Asia, the dollar and crude oil fell while gold strengthened. US jobless claims data is due before the opening bell on Wall Street.
A number of Federal Reserve speakers on Wednesday agreed with Chair Jerome Powell in saying interest rates will rise, with attention turning to US inflation data next week.
Meanwhile, Sweden’s central bank raised interest rates by half a percentage point to 3% on Thursday, forecasting further tightening in the spring.
Investors rushed to better-than-expected earnings from Siemens, AstraZeneca and Disney, which helped quell uncertainty about the interest rate outlook.
However, Credit Suisse Group (CSGN.S) bucked the trend after it reported its worst annual loss since the global financial crisis of 2008, coupled with outflows of more than $120 billion in the fourth quarter, sending its shares down 8 % sent down.
last update
Watch 2 more stories
The STOXX (.STOXX) index of European equities rose 1% to its highest level in a year as investors hoped for peak inflation and a deeper recession that now looks less likely on the continent.
“I think there will be outperformance in Europe simply because energy prices have fallen a lot more than was perhaps anticipated last year,” said Mike Hewson, chief market analyst at CMC Markets.
German consumer prices, harmonized to compare them to other European Union countries, rose a less-than-expected 9.2% year-on-year in January, helping to reassure markets that prices have peaked.
“It won’t change the ECB’s mind for a 50 basis point rate hike in March,” Hewson said.
The MSCI All Country Stock Index (.MIWD00000PUS) is up 0.35%, building on gains so far of about 7.5% this year after a 20% loss in 2022.
“We’re still caught up in these choppy macroeconomic dynamics, with risk activating and risk deactivating. People are still calibrating through what normal growth looks like,” said Paul Major, manager of Bellevue Healthcare Fund plc.
It’s unclear whether China will “come back” to fuel the global economy in the second half of the year, and if so, whether it would trigger another round of inflationary pressures, Major said.
“The US is on fire… I think I would want to be overweight US stocks for the next three to five years because they have energy independence and a resilient economy,” Major said
Europe’s gas rollercoaster
ASIA COMPANY
MSCI’s broadest index of Asia-Pacific stocks outside of Japan (.MIAPJ0000PUS) rose 0.5% after falling earlier in the session, although Japan’s Nikkei (.N225) remained slightly weaker.
China’s blue chips (.CSI300) rose 1.3%, breaking away from a one-month low, while Hong Kong’s Hang Seng Index (.HSI) rose 1.6%.
Barclays raised its forecast for China’s economic growth this year to 5.3% from 4.8% previously, while Fitch revised upwards its forecast for China’s economic growth this year to 5%. Both cited an accelerating recovery in consumer spending. Continue reading
The bond market rallied somewhat after being caught flat-footed by January’s blockbuster US jobs report, forcing many to reposition for a higher Fed interest rate peak.
The two-year Treasury yield, which rose amid traders’ expectations for higher Fed fund rates, slipped to 4.4316% on Thursday, while the benchmark 10-year Treasury yield slipped to 3.6012%.
Futures are pricing in the Fed’s interest rate peaking at 5.122% in July, about 25 basis points higher than last week, and that it will have fallen to 4.804% by December, a jump of about 40 basis points from a week ago.
Movements on the foreign exchange markets were rather restrained. The dollar index slipped 0.5%.
In the oil market, Brent crude futures were down 0.3% to $84.91, while US West Texas Intermediate (WTI) crude was down 0.2% to $78.23.
Gold was slightly higher. Spot gold was trading at $1,881 an ounce, up 0.3% on the day.
Reporting by Huw Jones, additional reporting by Stella Qiu; Edited by Bernadette Baum
Our standards: The Thomson Reuters Trust Principles.
Comments are closed.