European stocks rose with US equity futures rose amid a positive tone for risk taking as companies delivering positive earnings surprises assuaged recent disappointments.
(Bloomberg) — European stocks rose with US equity futures rose amid a positive tone for risk taking as companies delivering positive earnings surprises assuaged recent disappointments.
Gains in tech drove a 0.5% advance in the Stoxx Europe 600 Index, with the Nasdaq 100 up a similar magnitude. Tesla Inc.’s earnings report after the close of trading helped relieve some of the sting of Microsoft Corp.’s dire sales warning earlier in the week.
Telecoms group Nokia Oyj surged after better-than-expected quarterly operating profit. Chipmaker STMicroelectronics NV jumped after reporting rising revenue in the fourth quarter and as demand in the auto industry remains strong.
The dollar fell against Group-of-10 peers on speculation that the Federal Reserve may be getting closer to pausing its rate-hike cycle.
Soft-landing bets and expectations for moderate Fed rate hikes has helped push the S&P 500 toward its best January since 2019. But a backlash is mounting, with voices on the buyside and sellside saying the rally has no staying power as earnings come under pressure and central banks loathe to give up tight policy while inflation remains near decade highs.
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A shift into bonds underscores the fragile sentiment, as investors look to hedge a growth downturn that would hit stocks hardest. Saira Malik, chief investment officer of Nuveen, said earnings risk in a consumer-led slowdown will act as a headwind to equities.
“You can start to increase your duration in fixed-income and get strong total returns in it without a lot of these heavy macro risks that are going to hit equities,” Malik said in an interview with Bloomberg TV. “Equities considering their valuation are less attractive.”
Meanwhile, Elon Musk’s electric-vehicle giant whipsawed in late trading before gaining more than 5%. International Business Machines Corp. delivered an upbeat annual sales forecast while announcing it would eliminate about 1.5% of its global workforce, following similar job cuts by many of its tech peers.
That fed through to trading in Asia, as Hong Kong-listed technology companies surged more than 3%, pushing the region’s stock benchmark toward the highest close since April.
Elsewhere, oil steadied as investors weighed the outlook for Chinese demand. Gold was little changed.
Key events:
- Earnings for the week include: American Airlines, Blackstone, Comcast, Diageo, Intel, LVMH Moet Hennessy Louis Vuitton, Mastercard, SAP, Southwest Airlines, Visa (Thursday); American Express, Charter Communications, Chevron, HCA Healthcare (Friday)
- US fourth-quarter GDP, new home sales, initial jobless claims, Thursday
- US personal income/spending, PCE deflator, University of Michigan consumer sentiment, pending home sales, Friday
Some of the main moves in markets:
Stocks
- The Stoxx Europe 600 rose 0.5% as of 9:01 a.m. London time
- S&P 500 futures rose 0.3%
- Nasdaq 100 futures rose 0.6%
- Futures on the Dow Jones Industrial Average were little changed
- The MSCI Asia Pacific Index rose 0.7%
- The MSCI Emerging Markets Index rose 1%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro fell 0.1% to $1.0905
- The Japanese yen fell 0.2% to 129.84 per dollar
- The offshore yuan rose 0.5% to 6.7394 per dollar
- The British pound was little changed at $1.2392
Cryptocurrencies
- Bitcoin fell 2.5% to $23,019.95
- Ether fell 0.6% to $1,608.66
Bonds
- The yield on 10-year Treasuries advanced one basis point to 3.45%
- Germany’s 10-year yield was little changed at 2.15%
- Britain’s 10-year yield was little changed at 3.24%
Commodities
- Brent crude fell 0.2% to $85.93 a barrel
- Spot gold fell 0.2% to $1,942.40 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Tassia Sipahutar, Brett Miller and Joe Easton.
More stories like this are available on bloomberg.com
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