The dollar fell the most in two weeks, while stocks rose as traders took bullish cues from improving Chinese data and comments from Treasury Secretary Janet Yellen.
(Bloomberg) — The dollar fell the most in two weeks, while stocks rose as traders took bullish cues from improving Chinese data and comments from Treasury Secretary Janet Yellen.
The yen had the biggest move against the dollar, surging more than 1% after Bank of Japan Governor Kazuo Ueda aired the possibility of ending the developed world’s last key negative interest rate.
Meanwhile, futures on the S&P 500 rose 0.5% and European equities advanced. Tesla Inc. rallied as much as 6.1% in US premarket trading on an upgrade from Morgan Stanley. Italian banks led gains among European lenders after a report that the government is weighing changes to a controversial tax on banks’ windfall profits.
“This dollar weakness is definitely a bull case for markets,” Beata Manthey, global equity strategist at Citigroup Inc. said in an interview on Bloomberg Television. “Let’s see what the week brings in terms of monetary policy decisions.”
Read More: Dollar’s Record Rally Falters as China, Japan Step Up Defenses
There’s a raft of news later in the week that could shape the direction of markets.
On Thursday, the European Central Bank is expected to announce its policy decision. A Bloomberg survey showed an almost even split between economists anticipating a 10th consecutive hike and those anticipating a “hawkish pause.” U.S. inflation data is also due on Wednesday, which may be pivotal before the Federal Reserve meets on Sept. 19.
Speaking over the weekend, Yellen said she’s increasingly confident that the US will be able to contain inflation without major damage to the job market. “Every measure of inflation is on the road down,” Yellen said.
In China, there are hints that the economy may be stabilizing after a sharp downturn. Strong credit data published Monday showed recent steps to bolster the real estate market may be starting to lift household demand for mortgages, while corporate loans also picked up.
Yuan Fix
The yuan rebounded from a 16-year low after the People’s Bank of China delivered a strong verbal warning to speculators. Policymakers also set a daily fixing that was stronger-than-expected. The benchmark CSI 300 Index rose 0.7% on Monday, snapping a four-session losing streak.
In commodity markets, copper, iron ore and other metals also got a boost from the weakness in the greenback, while improved Chinese data aided sentiment.
Most emerging-market currencies advanced and a gauge of developing-nation stocks jumped by the most in a week, led by Chinese shares.
“If the soft-landing scenarios overtake, it could be time to be overweight on emerging markets,” Citi’s Manthey said. “For now being overweights parts of commodity space is enough.”
Elsewhere, Arm Holdings Ltd. is considering raising the price range of its initial public offering after meeting investors for what would be the world’s largest listing this year, according to people familiar with the matter.
The SoftBank Group Corp.-owned chip designer’s share sale is about six times subscribed, said the people, who asked not to be identified as the information is private.
Key events this week
- UK jobless claims, unemployment, Tuesday
- Eurozone industrial production, Wednesday
- UK industrial production, Wednesday
- US CPI, Wednesday
- Eurozone ECB rate decision, Thursday
- Japan industrial production, Thursday
- US retail sales, PPI, business inventories, initial jobless claims, Thursday
- China property prices, retail sales, industrial production, Friday
- US industrial production, University of Michigan consumer sentiment, Empire Manufacturing index, Friday
Some of the main moves in markets:
Stocks
- The Stoxx Europe 600 rose 0.3% as of 1:19 p.m. London time
- S&P 500 futures rose 0.5%
- Nasdaq 100 futures rose 0.8%
- Futures on the Dow Jones Industrial Average rose 0.1%
- The MSCI Asia Pacific Index rose 0.5%
- The MSCI Emerging Markets Index rose 0.3%
Currencies
- The Bloomberg Dollar Spot Index fell 0.5%
- The euro rose 0.2% to $1.0725
- The Japanese yen rose 0.9% to 146.44 per dollar
- The offshore yuan rose 0.8% to 7.3093 per dollar
- The British pound rose 0.4% to $1.2521
Cryptocurrencies
- Bitcoin fell 0.8% to $25,621.08
- Ether fell 2% to $1,586.61
Bonds
- The yield on 10-year Treasuries advanced one basis point to 4.28%
- Germany’s 10-year yield advanced two basis points to 2.63%
- Britain’s 10-year yield advanced four basis points to 4.47%
Commodities
- Brent crude fell 0.2% to $90.44 a barrel
- Spot gold rose 0.4% to $1,926.53 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Brett Miller, Tania Chen and Cecile Gutscher.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.