European stocks edged higher as investors assessed responses by leaders to the region’s growing energy crisis ahead of the European Central Bank’s policy meeting later this week. US equity futures climbed.
(Bloomberg) — European stocks edged higher as investors assessed responses by leaders to the region’s growing energy crisis ahead of the European Central Bank’s policy meeting later this week. US equity futures climbed.
Gains in retailers, autos and travel shares lifted the Stoxx Europe 600 Index, while energy underperformed as a rally in oil cooled. Both S&P 500 and Nasdaq 100 contracts advanced by more than 0.5%. Wall Street trading will resume later after the Labor Day holiday.
The pound rebounded and an index of domestically focused UK stocks rose as traders assessed the agenda of incoming UK Prime Minister Liz Truss. The new leader is finalizing plans for a £40 billion ($46 billion) support package to lower energy bills for businesses, according to documents seen by Bloomberg. A dollar gauge was steady.
Treasuries dipped, led by shorter maturities, taking the two-year yield to 3.46%. European natural gas prices eased with politicians scrambling to find solutions after Moscow switched off its main pipeline to the continent. Gains in oil prices sparked by an OPEC+ output cut faltered on demand risks from China’s Covid lockdowns.
Borrowing costs are rising in a slew of economies, tightening financial conditions globally and weighing on stocks and bonds. The focus turns next to the ECB, with economists at some of Wall Street’s top banks expecting it to announce a hike of 75 basis points on Thursday.
“A lot of clients are asking, have we seen the bottom yet and are we going into a global recession?” Grace Tam, BNP Paribas Wealth Management Hong Kong chief investment adviser, said on Bloomberg Television. “We do think the risk of a global recession, especially next year, is actually quite high” and that the energy crisis “is not fully priced” into markets, she said.
In Asia, a regional equities benchmark retreated. Australia delivered its fourth 50 basis-point interest-rate hike and reiterated it’s not on a predetermined path in the push to curb inflation.
The offshore yuan fluctuated in the wake of China’s announcement of a cut in the amount of foreign-exchange deposits banks must set aside as reserves. Officials in China also plan to speed up stimulus, stepping up support for an economy saddled with Covid lockdowns, a property slump and power shortages.
In US premarket trading, Bed Bath & Beyond Inc. shares dropped 15%, set to fall for a fifth session, with other stocks popular with retail investors, such AMC Entertainment Holdings Inc. and GameStop Corp., also lower.
Elsewhere, Bitcoin again fell below the $20,000 level, while gold made gains.
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What to watch this week:
- Apple event due to feature new iPhones, watches, Wednesday
- Bank of England Governor Andrew Bailey at Treasury Committee, Wednesday
- Fed’s Beige Book of regional economic activity, Wednesday
- Cleveland Fed President Loretta Mester due to speak, Wednesday
- European Central Bank rate decision, Thursday
- Fed Chair Jerome Powell speaks at a Cato Institute conference in Washington, Thursday
- Reserve Bank of Australia Governor Philip Lowe speaks at event, Thursday
- China PPI, aggregate financing, money supply, new yuan loans, Friday
- EU energy ministers extraordinary meeting on emergency intervention in electricity markets, Friday
Some of the main moves in markets:
Stocks
- The Stoxx Europe 600 rose 0.3% as of 9:41 a.m. London time
- Futures on the S&P 500 rose 0.6%
- Futures on the Nasdaq 100 rose 0.8%
- Futures on the Dow Jones Industrial Average rose 0.5%
- The MSCI Asia Pacific Index fell 0.4%
- The MSCI Emerging Markets Index rose 0.2%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro rose 0.3% to $0.9956
- The Japanese yen fell 0.8% to 141.79 per dollar
- The offshore yuan fell 0.3% to 6.9638 per dollar
- The British pound rose 0.4% to $1.1559
Bonds
- The yield on 10-year Treasuries advanced seven basis points to 3.26%
- Germany’s 10-year yield declined one basis point to 1.55%
- Britain’s 10-year yield advanced three basis points to 2.97%
Commodities
- Brent crude fell 0.8% to $95 a barrel
- Spot gold rose 0.2% to $1,713.62 an ounce
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