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(Bloomberg) — European stocks and US equity futures rose, while the dollar weakened as investors scaled back bets on how aggressively the Federal Reserve will tighten policy.
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S&P 500 futures were up 0.7% and the Stoxx 600 added 0.7% as well. A gauge of Asian shares climbed 1.2%, boosted by a jump in Chinese technology firms. The Bloomberg Dollar Spot Index slipped 0.4%, extending a retreat from a record high.
Commodities were broadly stronger. West Texas Intermediate crude traded near $99 a barrel, after US President Joe Biden’s trip to the Middle East ended without a firm commitment from Saudi Arabia to boost crude supplies. Wheat climbed after a five-day slump and copper rallied.
Investors continue to be whipsawed by concerns over inflation and the potential for a US recession. Data last week showing a drop in long-term US inflation expectations eased some fears that elevated price pressures are becoming entrenched. Strong retail sales underscored a resilient economy despite monetary tightening.
While stocks are pricing in a recession, there are signs that “this is a market that wants to start bottom fishing,” Lori Calvasina, head of US equity strategy at RBC Capital Markets, said on Bloomberg Television. “People are starting to look for things that have been de-risked.”
Traders are back to expecting a 75 basis points July Fed rate hike, after last week flirting with the prospect of a 100 basis points move to hammer inflation.
Still, the outlook remains troubling for many investors. The International Monetary Fund will cut its global economic growth outlook “substantially” in its next update as nations run out of options to tackle worsening risks.
Key events to watch this week:
Earnings this week include Bank of America, Goldman Sachs, Tesla
US Treasury Secretary Janet Yellen visits South Korea. Tuesday
Reserve Bank of Australia releases July minutes. Tuesday
UK Chancellor Nadhim Zahawi and Bank of England Governor Andrew Bailey speak at event. Tuesday
Bloomberg Crypto Summit in New York. Tuesday
Bank of Japan, European Central Bank rate decisions. Thursday
Nord Stream 1 pipeline scheduled to reopen following maintenance. Thursday
Some of the main moves in markets:
Stocks
The Stoxx Europe 600 rose 0.7% as of 8:12 a.m. London time
Futures on the S&P 500 rose 0.7%
Futures on the Nasdaq 100 rose 0.8%
The MSCI Asia Pacific Index rose 1.2%
The MSCI Emerging Markets Index rose 1.5%
Currencies
The Bloomberg Dollar Spot Index fell 0.4%
The euro rose 0.5% to $1.0135
The Japanese yen rose 0.2% to 138.24 per dollar
The offshore yuan rose 0.1% to 6.7536 per dollar
The British pound rose 0.6% to $1.1922
Bonds
The yield on 10-year Treasuries advanced three basis points to 2.95%
Germany’s 10-year yield advanced five basis points to 1.19%
Britain’s 10-year yield advanced four basis points to 2.13%
Commodities
Brent crude rose 2.4% to $103.54 a barrel
Spot gold rose 0.4% to $1,715.82 an ounce
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