Stocks gained on speculation the Federal Reserve is close to the end of its tightening cycle after the central bank said any further tightening would be data dependent.
(Bloomberg) — Stocks gained on speculation the Federal Reserve is close to the end of its tightening cycle after the central bank said any further tightening would be data dependent.
An Asian equity gauge climbed for a fourth day, while European and US equity futures also advanced. The dollar weakened against all its Group-of-10 peers — but was off earlier lows — as traders trimmed bets on further Fed interest-rate hikes this year.
“The market has digested the FOMC decision and the opinion is Powell isn’t more hawkish than before, therefore we’re back to the original peak rate expectation and timeline,” said Mingze Wu, a foreign-exchange trader at StoneX Group in Singapore.
The European Central Bank will raise its benchmark by another quarter-point Thursday, according to a Bloomberg survey. Investors will monitor the meeting for any clue as to whether the increase is the last one in the currency tightening cycle.
“With the market already fully pricing the hike this week and the ECB not willing to commit one way or another for September, we would not expect much impact on the euro, which remains mostly data-driven,” strategists at Bank of America Corp., including Athanasios Vamvakidis, wrote in a note.
A number of major European companies are reporting earnings Thursday. BNP Paribas SA’s second-quarter net income beat estimates and drugmaker Roche Holding AG reported first-half sales that were slightly below expectations.
Possible Pause
There was something for everyone in Fed Chair Jerome Powell’s remarks Wednesday after the Fed hiked its benchmark to a 22-year high, but the market finished the US session betting the next move would possibly be a pause.
Traders and Fed policymakers will also have plenty of US data to examine on Thursday, including GDP, personal consumption expenditures and initial jobless claims.
The Dow Jones Industrial Average gained for a 13th day Wednesday — the longest winning streak since 1987.
Another driver in the US session was a batch of earnings reports. Facebook parent Meta Platforms Inc. climbed in late trading after projecting revenue that beat estimates, while eBay Inc. fell on a disappointing profit outlook.
XPeng Soars
XPeng Inc. was the best performer in MSCI Inc.’s Asia Pacific Index, jumping more than 30%, after Volkswagen AG said it planned to invest $700 million in the Chinese electric-vehicle maker.
Treasuries were little changed, while the yen strengthened for a fourth day as traders awaited a Bank of Japan policy decision Friday for possible guidance on a shift in the central bank’s yield-curve control policy.
In commodities, oil advanced amid declines in US crude inventories and gold rose for a third day.
Key events this week:
- ECB rate decision, Thursday
- US GDP, durable goods orders, initial jobless claims, wholesale inventories, Thursday
- Japan Tokyo CPI, Friday
- BOJ rate decision, Friday
- Eurozone economic confidence, consumer confidence, Friday
- US consumer income, employment cost index, University of Michigan consumer sentiment, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures rose 0.2% as of 6:53 a.m. London time. The S&P 500 was little changed
- Nasdaq 100 futures rose 0.6%. The Nasdaq 100 fell 0.4%
- Euro Stoxx 50 futures rose 0.4%
- Japan’s Topix index rose 0.5%
- Hong Kong’s Hang Seng Index rose 1.1%
- China’s Shanghai Composite Index was little changed
- Australia’s S&P/ASX 200 Index rose 0.8%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.1095
- The Japanese yen was little changed at 140.18 per dollar
- The offshore yuan rose 0.2% to 7.1371 per dollar
- The Australian dollar rose 0.5% to $0.6795
- The British pound was little changed at $1.2951
Cryptocurrencies
- Bitcoin fell 0.4% to $29,478.57
- Ether was little changed at $1,879.46
Bonds
- The yield on 10-year Treasuries declined one basis point to 3.85%
- Japan’s 10-year yield declined 0.5 basis point to 0.440%
- Australia’s 10-year yield declined six basis points to 3.95%
Commodities
- West Texas Intermediate crude rose 0.9% to $79.52 a barrel
- Spot gold rose 0.2% to $1,975.84 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Marcus Wong.
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