Stocks Hold Gains After Big Rally on Fed Rates: Markets Wrap

(Bloomberg) — Stock and bond markets steadied after last week’s blockbuster rally, with traders still optimistic that US and European central banks may start cutting interest rates as soon as next year.

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US futures added about 0.1%, with Tesla Inc. gaining in premarket trading after Reuters reported the company would produce a new, more affordable electric car model in Germany. WeWork Inc. shares were halted for pending news, following a report the company was preparing to file for bankruptcy. Europe’s Stoxx 600 index pulled back slightly after recent gains.

The dollar fell for a fourth day. Crude futures rose more than 1% after Saudi Arabia and Russia reaffirmed they will stick with their supply curbs through year-end.

Global stocks have been finding firmer footing after recent US data pointed to a cooling economy, leading traders to price lower rates by June. Ten-year Treasury yields, the benchmark rate for the global cost of capital, edged higher Monday, having slid in recent weeks from the 16-year highs touched last month.

“A better-than-expected US earnings season and the peak in interest rates are all pointing towards a year-end rally,” said Leonardo Pellandini, an equity strategist at Bank Julius Baer in Zurich.

Read More: BlackRock’s Boivin Says High Rates Still a Threat to Stock Rally

More information about how policymakers see the trajectory of inflation may come later in week, with speeches due from Federal Reserve Chair Jerome Powell and Bank of England governor Andrew Bailey.

Some market watchers, such as Morgan Stanley strategist Michael Wilson, are skeptical equities can sustain recent gains. Last week’s equity bounce was more of a bear market rally than the start of a sustained upswing, Wilson said, citing a weaker earnings outlook and macro data.

Earlier in the day, Asian markets jumped, with South Korea’s Kospi finishing more than 5% higher after regulators banned short selling.

Key events this week:

• Eurozone services PMI, Monday

• Australia interest rate decision, Tuesday

• China trade data, Tuesday

• US trade balance, Tuesday

• Dallas Fed President Lorie Logan speaks, Tuesday

• Germany CPI, Wednesday

• Bank of England Governor Andrew Bailey speaks, Wednesday

• China PPI, CPI, Thursday

• US initial jobless claims, Thursday

• Fed Chair Jerome Powell speaks, Thursday

• US consumer confidence, Friday

• UK industrial production, GDP, Friday

Some of the main moves in markets:

Stocks

• The Stoxx Europe 600 fell 0.1% as of 1:20 p.m. London time

• S&P 500 futures rose 0.1%

• Nasdaq 100 futures rose 0.1%

• Futures on the Dow Jones Industrial Average were little changed

• The MSCI Asia Pacific Index rose 1.9%

• The MSCI Emerging Markets Index rose 2.1%

Currencies

• The Bloomberg Dollar Spot Index was little changed

• The euro was little changed at $1.0741

• The Japanese yen fell 0.3% to 149.80 per dollar

• The offshore yuan was little changed at 7.2833 per dollar

• The British pound was little changed at $1.2392

Cryptocurrencies

• Bitcoin rose 1% to $35,036.54

• Ether rose 1.6% to $1,899.17

Bonds

• The yield on 10-year Treasuries advanced four basis points to 4.61%

• Germany’s 10-year yield advanced seven basis points to 2.71%

• Britain’s 10-year yield advanced six basis points to 4.34%

Commodities

• Brent crude rose 1% to $85.76 a barrel

• Spot gold fell 0.4% to $1,984.76 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Richard Henderson, Alex Nicholson and Alice Gledhill.

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