Stocks and futures rise as political meetings loom: Markets Wrap

(Bloomberg) — Stocks and U.S. stock futures rose as investors looked to policy decisions from the U.S. and Japan this week for near-term trading signals.

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The Stoxx Europe 600 rose slightly at the open, with consumer staples leading the advance as Reckitt Benckiser Group Plc recovered after last week's sell-off following a legal setback in the United States. Futures on the S&P 500 and Nasdaq 100 rose after Bloomberg reported that Apple Inc. is in talks to build Google's Gemini artificial intelligence engine into the iPhone, a move that has the potential to shake up the AI ​​industry .

The Federal Reserve's policy meeting on Wednesday could determine the direction of global stock markets for the next quarter. Before the blackout period, Chairman Jerome Powell suggested that the central bank was close to having the confidence to cut, while others debated how deep or shallow those declines would be.

Meanwhile, bond traders appear to have painfully resigned themselves to a reality that is higher for an extended period of time. Policy-sensitive two-year Treasury yields rose 11 basis points to 4.73% this month, extending last month's rise. According to data compiled by Bloomberg, swap traders are expecting about 71 basis points of rate cuts by year-end, compared with 134 basis points at the start of the year.

“The Fed may have less confidence in inflation than before, but it still has confidence in the disinflation trend” and could maintain its median forecast of three rate cuts this year, Bank of America economists including Michael Gapen wrote in a note to the customers. “This may be fanciful thinking on our part, but there are multiple inflation reports and there is still plenty of time until June to change course if necessary.”

The 10-year Treasury yield remained near a three-week high after rising more than 20 basis points last week, and a measure of the dollar remained steady.

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The MSCI Asia Pacific index rose as Japanese stocks outperformed the region. The Nikkei 225 index rose by the most in a month as bets grew that the Bank of Japan will end its negative interest rate policy on Tuesday. The yen traded weaker against the dollar.

“Japanese stocks are rising, driven by yen weakness and expectations that the currency will not strengthen even if the central bank raises interest rates,” said Charu Chanana, a strategist at Singapore-based Saxo Capital Markets. “It seems like the BOJ has priced everything in and the focus this week is much more on Nvidia and the Fed.”

In China, stocks rallied on surprisingly strong economic data, further evidence that the world's second-largest economy has more traction.

Elsewhere this week, the Reserve Bank of Australia will extend its interest rate pause, while Bank Indonesia and the Bank of England will also make policy decisions. Eurozone inflation data is due, as is Reddit Inc.'s IPO.

In earnings news, FedEx Corp. updated its outlook. for the year will provide clues about the state of the U.S. economy, while results from Nike Inc., Lululemon Athletica Inc., General Mills Inc. and Darden Restaurants Inc. will show whether consumers are curbing spending or curbing commerce, in particular given the ongoing inflation.

In commodities, oil hit a new four-month high – building on its biggest weekly rise in a month – as macroeconomic data from China beat expectations and Ukrainian attacks on Russian refineries raised geopolitical risks. Copper fell from its highest close in a year. Gold rim below.

Important events this week:

• Eurozone CPI, Monday

• Tariff decision for Australia, Tuesday

• Interest rate decision for Japan, Tuesday

• Inflation in Canada, Tuesday

• Key interest rates for Chinese loans, Wednesday

• Interest rate decision for Indonesia, Wednesday

• UK CPI, Wednesday

• US interest rate decision, Wednesday

• Interest rate decision for Brazil, Wednesday

• ECB President Christine Lagarde speaks on Wednesday

• New Zealand GDP, Thursday

• Taiwan interest rate decision, Thursday

• Interest rate decision for Switzerland, Thursday

• Interest rate decision Norway, Thursday

• Interest rate decision for Great Britain, Thursday

• Mexico interest rate decision, Thursday

• European Union summit on Thursday in Brussels

• Japan CPI, Friday

Some of the key moves in the markets:

Shares

• The Stoxx Europe 600 was up 0.1% at 8:07 a.m. London time

• S&P 500 futures rose 0.3%

• Nasdaq 100 futures rose 0.5%

• The futures on the Dow Jones Industrial Average hardly changed

• The MSCI Asia Pacific index rose 0.9%

• The MSCI Emerging Markets Index rose 0.4%

Currencies

• The Bloomberg Dollar Spot Index was little changed

• The euro was little changed at $1.0896

• The Japanese yen was little changed at 149.13 per dollar

• The offshore yuan was little changed at 7.2054 per dollar

• The British pound was little changed at $1.2743

Cryptocurrencies

• Bitcoin fell 0.4% to $68,019.26

• Ether fell 0.6% to $3,611.52

Tie up

• The yield on 10-year government bonds remained little changed at 4.30%

• The yield on 10-year German government bonds has hardly changed at 2.44%.

• The 10-year UK government bond yield fell one basis point to 4.09%

raw materials

• Brent crude rose 0.6% to $85.83 a barrel

• Spot gold fell 0.2% to $2,150.64 an ounce

This story was produced with support from Bloomberg Automation.

– With assistance from Michael G. Wilson.

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