Stocks pause after rally, look for interest rate cut signals: Markets close

(Bloomberg) — European stocks remained at a record high after six weeks of gains as investors awaited confirmation that central banks are on track to cut interest rates in the coming months.

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The pan-European Stoxx 600 index rose 0.1%, although the technology stocks sub-index outperformed, replicating Wall Street's gains on Friday. Nasdaq 100 futures rose slightly, suggesting megacap tech stocks like Nvidia Corp. could continue to rise. Government bonds fell while oil prices stabilized near their peak this year after OPEC+ extended production cuts.

The S&P 500 index has now gained 16 of the last 18 weeks, an increase not seen since 1971, analysts at Deutsche Bank AG emphasized. That rally was further fueled last week by U.S. data that bolstered bets that the Federal Reserve could cut interest rates later this year. Earnings season, meanwhile, saw companies post average earnings growth of 8%.

“Better economic outlook, optimistic investor sentiment and some better earnings have supported equity markets,” Jefferies strategist Mohit Kumar wrote in a note. “Whether it’s the economic outlook or the central bank put coming back on the table, investors are very positive about risky assets.”

While markets have broadly shifted Fed policy easing expectations to July from the previously expected May, Kumar still expects 75 to 100 basis points worth of rate cuts this year.

Some clues may come from Fed Chairman Jerome Powell's testimony to Congress this week, while the European Central Bank is set to hold a monetary policy meeting on Thursday. A range of economic data is also due, including monthly US payrolls on Friday.

In premarket U.S. trading, chipmakers continued their rise, with Western Digital Corp., Micron Technology Inc. and Nvidia gaining between 1% and 3.5%. Tesla Inc fell 1.7%.

The story goes on

In Europe, Delivery Hero SE rose after announcing the launch of a financing transaction to modify and expand its financing options. Previously, the world's leading chipmaker Taiwan Semiconductor Manufacturing Co. reached its highest level ever in Asia.

Elsewhere, Bitcoin surpassed $65,000, prompting traders to bet that the cryptocurrency will surpass the record price of nearly $69,000 set during the pandemic.

Important events this week:

• ECB Council member Robert Holzmann speaks on Monday

• The Fed's Patrick Harker speaks on Monday

• Japan's CPI for Tokyo, Tuesday

• BOJ Governor Kazuo Ueda speaks on Tuesday

• China Caixin Services PMI, Tuesday

• China opens its 14th National People's Congress on Tuesday

• Eurozone S&P Global Services PMI, PPI, Tuesday

• US factory orders, ISM services, S&P Global Services PMI, Tuesday

• More than a dozen US states are holding primaries for Republicans and Democrats on Tuesday

• Australia's GDP, Wednesday

• British Chancellor Jeremy Hunt will present the annual budget on Wednesday

• Eurozone retail sales, Wednesday

• Fed Chairman Jerome Powell testifies before a House committee on Wednesday

• The Fed will release a Beige Book survey on regional economic conditions on Wednesday

• The Fed's Neel Kashkari and Mary Daly speak on Wednesday

• China trade, foreign exchange reserves, Thursday

• BOJ board member Junko Nakagawa speaks on Thursday

• ECB interest rate decision, Thursday

• US initial jobless claims trading, Thursday

• Fed Chairman Jerome Powell testifies before the Senate committee on Thursday

• The Fed's Loretta Mester speaks on Thursday

• US President Joe Biden will give the State of the Union address on Thursday

• Eurozone GDP, Friday

• US Non-Farm Payrolls, Unemployment, Friday

• The Fed's John Williams speaks on Friday

Some of the key moves in the markets:

Shares

• The Stoxx Europe 600 was up 0.1% at 9:44 a.m. London time

• S&P 500 futures were little changed

• Nasdaq 100 futures were little changed

• Futures on the Dow Jones Industrial Average fell 0.2%

• The MSCI Asia Pacific index rose 0.4%

• The MSCI Emerging Markets Index rose 0.7%

Currencies

• The Bloomberg Dollar Spot Index has barely changed

• The euro rose 0.1% to $1.0849

• The Japanese yen was little changed at 150.22 per dollar

• The offshore yuan was little changed at 7.2109 per dollar

• The British pound rose 0.2% to $1.2675

Cryptocurrencies

• Bitcoin rose 4% to $65,365.1

• Ether rose 1.6% to $3,533.1

Tie up

• The 10-year Treasury yield rose two basis points to 4.20%

• The 10-year German government bond yield fell three basis points to 2.39%

• The 10-year UK government bond yield fell two basis points to 4.09%

raw materials

• Brent crude oil was little changed

• Spot gold rose 0.1% to $2,085.85 an ounce

This story was produced with support from Bloomberg Automation.

– With support from Aya Wagatsuma, Winnie Hsu and Tassia Sipahutar.

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