Stock Rally Gains Momentum on Peak-Rate Bets: Markets Wrap

European stocks edged higher on Friday, set for their longest weekly run of gains since early December on speculation the Federal Reserve and other central banks are nearing the end of their hiking cycles. Treasuries steadied.

(Bloomberg) — European stocks edged higher on Friday, set for their longest weekly run of gains since early December on speculation the Federal Reserve and other central banks are nearing the end of their hiking cycles. Treasuries steadied.

The Stoxx 600 added 0.4%, set for a fourth straight weekly advance, its longest since Dec. 2. MSCI Inc.’s World Index rose for a second day, headed for its highest close in 10 weeks.

Contracts on the S&P 500 ticked lower after the gauge climbed the most this month following weaker-than-expected US factory-gate data Thursday. 

“Risk appetite returned to markets over the last 24 hours, aided by some weak US data that supported expectations the Fed might soon call it a day on their rate hikes,” Deutsche Bank AG strategists led by Jim Reid wrote in a note.

The next pressure point for markets is the start of earnings season later with results due from JPMorgan Chase, Wells Fargo and Citigroup.

“Investors will remain wary of any indication that the regional banking turmoil has translated into materially tighter lending standards throughout the system,” BMO strategists Ian Lyngen and Benjamin Jeffery wrote in a note.

Treasuries steadied after falling on Thursday amid improved risk sentiment. The policy-sensitive two-year yield held within a narrow range around 3.97%.

US rates have begun a process of consolidation that may stretch through next week and into the pre-Federal Open Market Committee period of radio silence, according to BMO strategists. 

Meanwhile, a Bloomberg gauge of the dollar steadied after droping to the lowest since February.

In commodities, oil and gold were little changed. Crude headed for a fourth week of gains amid signs of a tightening global market and a weaker dollar. 

Key events this week:

  • US retail sales, business inventories, industrial production, University of Michigan consumer sentiment, Friday
  • Major US banks JPMorgan Chase, Wells Fargo and Citigroup report earnings, Friday

Some of the main market moves:

Stocks

  • The Stoxx Europe 600 rose 0.4% as of 9:13 a.m. London time
  • S&P 500 futures fell 0.1%
  • Nasdaq 100 futures fell 0.1%
  • Futures on the Dow Jones Industrial Average fell 0.2%
  • The MSCI Asia Pacific Index rose 0.6%
  • The MSCI Emerging Markets Index rose 0.5%

Currencies

  • The Bloomberg Dollar Spot Index was little changed
  • The euro was little changed at $1.1056
  • The Japanese yen rose 0.2% to 132.33 per dollar
  • The offshore yuan rose 0.3% to 6.8490 per dollar
  • The British pound fell 0.1% to $1.2510

Cryptocurrencies

  • Bitcoin rose 1.7% to $30,792.2
  • Ether rose 5.1% to $2,110.78

Bonds

  • The yield on 10-year Treasuries was little changed at 3.44%
  • Germany’s 10-year yield advanced one basis point to 2.38%
  • Britain’s 10-year yield advanced one basis point to 3.59%

Commodities

  • Brent crude fell 0.5% to $85.69 a barrel
  • Spot gold fell 0.3% to $2,034.39 an ounce

This story was produced with the assistance of Bloomberg Automation.

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